Anyone with “earned income” in a prior year who is subject to Canadian taxation, including non-residents, may contribute to an RRSP. As part of your deduction limit, you can make part or all of your RRSP contributions to a plan in your spouse's name. You, as the contributor, are still entitled to the tax deduction.

For this purpose, a spouse refers to a legal married partner or a common-law partner of the opposite or same sex with whom you have cohabited for the last 12 months.

To maximize your long-term tax savings, there should be an attempt to “equalize” the retirement income of both spouses. Therefore, RRSP contributions should always go into the name of the spouse who will otherwise have the lower income in retirement.

If you haven't done this in past years – don't worry too much.  New measures introduced in 2007 provide some additional income splitting opportunities for eligible pension income.

Information for Tax Tips is provided as a public service by the Chartered Accountants of British Columbia.