Life Event
Strengthening Marriages with Smart Financial Planning
Marriage brings numerous financial opportunities, especially in the realm of income splitting. Properly navigating these opportunities can significantly enhance your financial health. Let us guide you through the various strategies and benefits associated with income splitting in marriage.
Understanding Income Splitting
Income splitting involves redistributing income between spouses to reduce the overall tax burden. This strategy can maximize tax savings by leveraging the difference in marginal tax rates between partners.
Tax Benefits
Income splitting can offer substantial tax benefits, helping couples reduce their taxable income and retain more of their earnings. By strategically splitting income, couples can take advantage of lower tax brackets and credits.
Pension Income Splitting
For retirees, pension income splitting can be a powerful tool. It enables spouses to allocate up to 50% of their eligible pension income to each other, resulting in significant tax savings and enhanced retirement income.
Registered Plans
Utilizing spousal RRSPs and TFSAs can be an effective income-splitting strategy. Contributing to your spouse’s registered plans can equalize retirement savings and reduce the family’s tax bill, leading to a more secure financial future.
Family Business Strategies
If you own a family business, there are additional income-splitting opportunities through salaries, dividends, and ownership shares. Properly structuring these elements can minimize taxes and ensure the business benefits both spouses equally.