TaxCycle | Products | Pricing | Training | Documentation | Support | News

Spousal RRSP

Want to clarify a few points regarding spousal RRSP

  1. When the contributor to the spousal RRSP makes a contribution it will reduce their income via deduction and RRSP contribution room.

  2. 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.

  3. 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.",as%20no%20funds%20are%20withdrawn%2C&text=Create%20a%20retirement%20income%20for,RRSP%20account%20of%20their%20own.

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."

  1. 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.

Hi Nice Guy,
Yes spousal RRSPs allows the contributor (often the higher income spouse) to contribute to the spouse’s RRSP BUT it’s limited to the contributor’s available RRSP contribution room, which is the biggest constraint. In any case, this method does allow a high income spouse to give money to the lower income spouse without attribution.

As for a more balanced income in retirement, pension splitting currently does this by allowing spouses to split up to 50% of their pension income but, as with all tax breaks, you never know in future when/if they will be taken away. So utilizing the spousal RRSP may minimize the risk of these tax laws changing.


1 Like

@NiceGuy you are correct. Typically either spouse could use the HBP or LLP without any difference in tax effect. However, note that if proper repayments are not made (which is common - people forget to notify their bank or financial planner, so the proper filing doesn’t get done), the expected repayment amount becomes an income inclusion in that year. And, if that income inclusion occurs within 3 years of the contribution, it is attributed to the contributor, even if the spouse was supposed to make the repayment.

TaxCycle automatically handles the income inclusion, but I don’t remember if it automatically handles the attribution (probably not). So, be sure to check that when you’re preparing the next several returns for that client.

I do not agree with Nezzer’s statement that “if that income inclusion (for failure to make the HBP repayment) occurs within 3 years of the contribution, it is attributed to the contributor, even if the spouse was supposed to make the repayment.” The subsection 146(8.3) attribution rule does not refer to, or apply to, an income inclusion under subsection 146.01(4). CRA agreed with my reading in technical interpretations 2008-0269911I7 and 2012-0462061E5. Also, if the annuitant spouse chooses to make the HBP repayment, it can, and probably should be, made to a non-spousal RRSP so that any future withdrawals would not be subject to attribution.

A further thought on spousal attribution: it is worth considering that if one spouse or common-law partner makes a gift to the other, and the donee chooses to contribute the money to a TFSA, the income and capital gains earned are not attributed to the donor spouse. Be careful: the donor spouse cannot contribute directly to the account - no one other than the "holder’ can contribute to a TFSA. Nevertheless, done properly, that is another way to transfer capital, and thus future income, from the higher earning spouse/clp to the lower.

Really? I had CRA re-assess a client a few years back for this very thing. Are you saying you had one like this and disputed it and CRA backed down? Good to know! Thanks for the technicals! I will refer to them next time.

I have not had a client reassessed on this issue. I have had clients go through the entire 15 year repayment period, with the annuitant spouse including the HPB amount in income each year, with no question from CRA. I think your client was the victim of an error in reassessment. Subsection 146(8.3) (the attribution rule in question) simply does not apply to “excluded withdrawals” under the Home Buyers’ Plan (section 146.01) or the Lifelong Learning Plan (section 146.02).

Please note my change of email address. The address will soon become invalid. Please address future electronic communications to . Thank you.

Should you have any questions or require more information, please contact me.


Keith Jackson

Keith A. Jackson, CPA, CGA

Keith A. Jackson
Chartered Professional Accountant
839 Glenbrae Street
Oshawa, Ontario L1J 5E2

Telephone (905) 725-8159
Facsimile (905) 725-9400

Thanks for the clarification. That might not be the same situation as my client:

He contributed to an RRSP for 4 years, split between his own and a spousal RRSP. Then both spouses withdrew the full amounts to use as down-payment on a house. Both spouses made the withdrawals under the HBP.
In subsequent years, neither spouse made any RRSP contributions (applied to HBP or otherwise). So, there was an income inclusion - which I reported equally on each spouse’s T1. CRA re-assessed the income inclusion from “her” return to “his” based on the fact that, since no actual contributions were made, it could not be considered a HBP repayment - it was simply a withdrawal from an RRSP within 3 years of being contributed.