Thank you for such great information your videos provide. I'm 65 still working but receiving CPP. Can i still splitt income with my retired husband 68 years old, since he's going to cash out his RRIF?
Thanks for this video. For the spousal loan, what happens when the lower income spouse pays the loan back to the higher income spouse? Will the funds that are paid back be added to the lender's income in that year? Is the strategy that the loan never gets paid back, or that it gets paid back to the lender when they are not in a high income bracket anymore?
Loan repayment is not added to income. It depends on your goals and objectives in terms of whether you would repay the loan or not. With today's prescribed rate, typically you would choose not to repay the loan and keep using the loan to generate higher return. However, there're some scenarios you would repay the loan as well.
Hi! New to your channel and just subscribed! Since this channel is more focused on real estate: What if a married couple both own a property (both names on title) and will be renting it out for rental income. Do we just split the income in half? One partner makes signficantly more than the other.
Thank you for the great content! I have a question: if I somehow cease to be a tax resident, do I need to take out all my contributed RRSP prior to my departure which will add back to my income that year(s)?
No you do not, when you withdraw from your RRSP you will be issued a slip and have a 25% withholding applied against the amount taken, unless it can be reduced by treaty
If we setup a HELOC on our principal residence for investment purposes. Do we have to invest in both spouses’ names? Or we can invest in the lower income spouse’s name only and be taxed at a lower rate? Thank you!
It depends on where the $$$ is coming in from...best to consult with a professional accountant to avoid attribution rule. If you don't have one, feel free to contact us at 416 548 4228
The contribution of TFSA account is not really income splitting though... its a tax deferral technique, unlike RRSP, you cant deduct the money you put into your RRSP
It is income splitting in a sense that the higher income spouse can earn the money, and utilize the lower income spouse TFSA account to generate investment income. Investment income earned is tax free. Withdrawal from your TFSA account is not attributable to the higher income spouse.
If you have a business that makes $1,500,000 a year. Would it make sense to have a company with 3 corporate partners that split 1/3 so each will have $500,000 income which will qualify as a small business and be taxed at the lower bracket for an Ontario CO?
If you have a business that net $1.5M income, you should totally come in to consult with our team, or your accountant, to make sure that your structure meets all the legal and tax concerns. Feel free to contact us at at 416-548-4228 or email us at admin@cccpa.ca.
Hello, thank you so much for these awesome videos... I have been watching ur videos all day long... I have a question and I relate my situation with few of ur videos. We came to Canada in 2015 We are a family of 3 in BC. Our first townhome we bought was in 2018, that time we were on single income Now with the 2 income and the property rates gone up we refinance and payed of a 90k debt from education and stuff we were also able to put 20% down for another townhome this year for rent it's been rented through property manager for 2300$ I earn 80 k and my wife about 90k.. together we make 160 to 170k per annum in salary... Now as you can understand this "money thing" is all new too us... We wanna do the best with the money and save on taxes.. and keep investing in real estate. I humbly ask for your advise if possible or if u can make a video on similar situation. That would be great... My gratitude for educating us on such topics.
Harsh, thanks for reaching out. I will keep your situation in mind for our upcoming videos. In your particular situation, I'm assuming that you are both employees, you might be left with very limited choice in terms of income splitting opportunities. It's worthwhile exploring however. Will keep you posted when we created the video.
Thank you so much for you response... I really appreciate it.. I will add few left out info. Just to help add to your upcoming video... As we were use to one salary and wanted to keep frugal habits. We decided to buy townhome for huge price 650k.. so our mortgage,strata, insurance cames up to 3000 and we rented it for 2300 .. We didn't think about cash on cash return or ROI... We just want to invest somewhere and not keep to money with us ...that way we are making a mandatory saving ... assuming the property rates will grow one day... Next time we do want to think on ROI and cash on cash return ...🙏🏽 But again desperately looking forward for your video on this... Thank u so very much..
When one spouse contributes to spousal RRSP, you have to wait for 3 years before the spouse makes the first withdrawal. The contributing spouse cannot keep contributing during this 3 years as well. Otherwise it triggers attribution rule and the income would be attributed back to the contributing spouse, which in essence defeat the purpose of using RRSP spousal contribution.
You don't have to. If you do spousal RRSP contribution, and want to avoid the RRSP withdrawal income to be attributed back to the high income spouse, then you need to wait for 3 years. If you withdraw before that 3 year period or constantly contribute and withdraw, the contribution is then added back to the contributing spouse, which defeat the purpose of splitting income with your spouse using RRSP spousal contribution.
@@michaelmorris2623 You can't. you have to leave the account untouched (no contribution and no withdrawals) for three years before your spouse can withdraw without attribution rule. You can ALWAYS withdraw but it can be attributed back to you. If you're referring to the strategy whereby you contribute to your own RRSP (no spousal RRSP contribution), you can withdraw the next year.
Which strategy? RRSP and TFSA are commonly used to split income with family members. Pension income splitting has been around for a number of years as well. Prescribed rate loan has also been around.
Thank you for such great information your videos provide.
I'm 65 still working but receiving CPP.
Can i still splitt income with my retired husband 68 years old, since he's going to cash out his RRIF?
Thank you for sharing all of this info, I learn a ton from your channel!
Glad you found it useful
Great and valuable information, thank you!
Glad it is useful 👍
Thanks for this video. For the spousal loan, what happens when the lower income spouse pays the loan back to the higher income spouse? Will the funds that are paid back be added to the lender's income in that year? Is the strategy that the loan never gets paid back, or that it gets paid back to the lender when they are not in a high income bracket anymore?
Loan repayment is not added to income.
It depends on your goals and objectives in terms of whether you would repay the loan or not. With today's prescribed rate, typically you would choose not to repay the loan and keep using the loan to generate higher return. However, there're some scenarios you would repay the loan as well.
Hi! New to your channel and just subscribed! Since this channel is more focused on real estate:
What if a married couple both own a property (both names on title) and will be renting it out for rental income. Do we just split the income in half? One partner makes signficantly more than the other.
If you are both on title than you must split the profit equally.
@@RealEstateTaxTips I thought that was the case! Thank you! And I already started looking through your other videos!
Thank you for the great content! I have a question: if I somehow cease to be a tax resident, do I need to take out all my contributed RRSP prior to my departure which will add back to my income that year(s)?
No you do not, when you withdraw from your RRSP you will be issued a slip and have a 25% withholding applied against the amount taken, unless it can be reduced by treaty
THANK YOU!
If we setup a HELOC on our principal residence for investment purposes. Do we have to invest in both spouses’ names? Or we can invest in the lower income spouse’s name only and be taxed at a lower rate? Thank you!
It depends on where the $$$ is coming in from...best to consult with a professional accountant to avoid attribution rule. If you don't have one, feel free to contact us at 416 548 4228
The contribution of TFSA account is not really income splitting though... its a tax deferral technique, unlike RRSP, you cant deduct the money you put into your RRSP
It is income splitting in a sense that the higher income spouse can earn the money, and utilize the lower income spouse TFSA account to generate investment income. Investment income earned is tax free. Withdrawal from your TFSA account is not attributable to the higher income spouse.
If you have a business that makes $1,500,000 a year. Would it make sense to have a company with 3 corporate partners that split 1/3 so each will have $500,000 income which will qualify as a small business and be taxed at the lower bracket for an Ontario CO?
If you have a business that net $1.5M income, you should totally come in to consult with our team, or your accountant, to make sure that your structure meets all the legal and tax concerns. Feel free to contact us at at 416-548-4228 or email us at admin@cccpa.ca.
Hello, thank you so much for these awesome videos...
I have been watching ur videos all day long...
I have a question and I relate my situation with few of ur videos.
We came to Canada in 2015
We are a family of 3 in BC.
Our first townhome we bought was in 2018, that time we were on single income
Now with the 2 income and the property rates gone up we refinance and payed of a 90k debt from education and stuff we were also able to put 20% down for another townhome this year for rent it's been rented through property manager for 2300$
I earn 80 k and my wife about 90k.. together we make 160 to 170k per annum in salary... Now as you can understand this "money thing" is all new too us... We wanna do the best with the money and save on taxes.. and keep investing in real estate.
I humbly ask for your advise if possible or if u can make a video on similar situation.
That would be great...
My gratitude for educating us on such topics.
Harsh, thanks for reaching out. I will keep your situation in mind for our upcoming videos.
In your particular situation, I'm assuming that you are both employees, you might be left with very limited choice in terms of income splitting opportunities. It's worthwhile exploring however. Will keep you posted when we created the video.
Thank you so much for you response...
I really appreciate it..
I will add few left out info. Just to help add to your upcoming video...
As we were use to one salary and wanted to keep frugal habits.
We decided to buy townhome for huge price 650k.. so our mortgage,strata, insurance cames up to 3000 and we rented it for 2300 ..
We didn't think about cash on cash return or ROI... We just want to invest somewhere and not keep to money with us ...that way we are making a mandatory saving ... assuming the property rates will grow one day...
Next time we do want to think on ROI and cash on cash return ...🙏🏽
But again desperately looking forward for your video on this...
Thank u so very much..
Can one spouse contribute in Spousal RRSP every year and withwdraw consecutively after 3 year each year?
When one spouse contributes to spousal RRSP, you have to wait for 3 years before the spouse makes the first withdrawal.
The contributing spouse cannot keep contributing during this 3 years as well. Otherwise it triggers attribution rule and the income would be attributed back to the contributing spouse, which in essence defeat the purpose of using RRSP spousal contribution.
@@RealEstateTaxTips Is that means only once in every three years that a spouse can contribute to the spousal RRSP if to avoid the attribution rule?
Why do you have to wait for three years to take the money out of RRSP?
You don't have to. If you do spousal RRSP contribution, and want to avoid the RRSP withdrawal income to be attributed back to the high income spouse, then you need to wait for 3 years. If you withdraw before that 3 year period or constantly contribute and withdraw, the contribution is then added back to the contributing spouse, which defeat the purpose of splitting income with your spouse using RRSP spousal contribution.
@@RealEstateTaxTips oh ok, thanks for the info. I thought you could put it in one year and take it out the next!!!
@@michaelmorris2623 You can't. you have to leave the account untouched (no contribution and no withdrawals) for three years before your spouse can withdraw without attribution rule.
You can ALWAYS withdraw but it can be attributed back to you.
If you're referring to the strategy whereby you contribute to your own RRSP (no spousal RRSP contribution), you can withdraw the next year.
@@RealEstateTaxTips ohhhhh, ok thanks
This is the first time I heard this, is this is allowed by CRA ?
Which strategy? RRSP and TFSA are commonly used to split income with family members. Pension income splitting has been around for a number of years as well. Prescribed rate loan has also been around.
The key though, is to make sure you work with a professional accountant to get these strategies done properly.
So looks like you need to find a wife first to take advantage of all of this
You can still split income with your future self using RRSP contribution.
@@RealEstateTaxTips That's not really splitting income....that's just differing taxes until retirement