General information only — not financial advice for your situation.
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Plain English
The higher earner in a couple contributes to their spouse's RRSP. They get the tax deduction now, and the spouse withdraws it later at a lower tax rate in retirement.
Technical definition
A spousal RRSP allows a higher-income spouse to contribute to the lower-income spouse's RRSP using the contributor's own deduction room. The contributor claims the deduction at their higher marginal rate, while the annuitant (lower-income spouse) is taxed on withdrawals at their lower rate in retirement. A three-calendar-year attribution rule applies to prevent immediate income-splitting.
Examples
- • You earn $120,000 (33% bracket) and contribute $10,000 to your spouse's RRSP, saving $3,300 in tax. Your spouse withdraws it in retirement at a 20% rate, paying only $2,000.
- • If your spouse withdraws from the spousal RRSP within 3 calendar years of your last contribution, the withdrawal is attributed back to you and taxed at your rate.
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About this site
Every number on this site is sourced from CRA publications, the Income Tax Act, or provincial fiscal releases. We show the math, cite the sources, and never tell you what to do with your money.