There are a number of tax advantages for making spousal or common-law partner RRSP contributions. When one spouse or common-law partner has a pension plan and the other does not, it is usually better for the spouse or common-law partner with the pension plan to contribute to the other spouse's or common-law partner’s RRSP. When pension benefits are received during the retirement years, the spouse or common-law partner with no pension plan will usually be in a lower tax bracket. The spousal or common-law partner RRSP plan will allow the retired couple to receive more income at the lower rate of tax.
Another advantage of spousal or common-law partner RRSP contributions arises when the pre-retirement spouses or common-law partners are in different tax brackets. The higher-income spouse or common-law partner gains a larger tax benefit from the RRSP deduction than the lower-income spouse or common-law partner. In addition, utilizing spousal or common-law partner RRSP contributions ensures the retired couple will be able to claim the $1,000 pension income tax credit twice.
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