Want to clarify a few points regarding spousal RRSP
When the contributor to the spousal RRSP makes a contribution it will reduce their income via deduction and RRSP contribution room.
There is a 3-year attribution rule meaning if the spouse (annuitant) withdraws funds before the third calendar year is over that withdrawal will be counted in the contributing spouse’s income.
There are exceptions to the rule. One of which is "when money is transferred to a homebuyer’s plan or used to fund post-secondary education."
Therefore, if the spouse (annuitant) withdraws funds from their RRSP under the home buyer plan the contributing spouse will not have to count it as income, however, the spouse(annuitant) that withdrew under the HBP will have to pay the withdrawal amount back within guidelines set by CRA.
"You have up to 15 years to repay to your RRSP amounts you withdrew from your RRSP under the HBP.
Your repayment period starts the second year after the year when you first withdrew funds from your RRSP(s) for the HBP. For example, if you withdrew funds in 2019, your first year of repayment will be 2021."
- This may be a good tax planning strategy for retirement. If the contributor has a significantly higher income throughout both of their careers they can contribute to the spouse’s RRSP. This will allow for more balanced RRSP amounts for both in retirement vs one partner having significantly more and consequently paying more in taxes in retirement.
Thoughts/Feedback would be appreciated.