What is income splitting?

This refers to the practice of decreasing the reported income of the greater earner in a family in order to decrease the overall tax load. You can consider this as an option if:

  • You have your own business, and you employ your spouse, children, or partner for a reasonable salary instead of claiming it as personal income
  • You contribute to your spouse’s, children’s, or partner’s retirement income through RRSPs
  • You loan money to your spouse, children, or partner at 1% interest