Generally, a spousal or common-law partner RRSP is one that will pay your spouse or common-law partner a retirement income at maturity, and both you and your spouse or common-law partner can contribute to it.
Generally, only the individual who is entitled to receive payments from the RRSP (the annuitant) can withdraw funds from an RRSP.
In general, the annuitant reports the RRSP withdrawal as income on his or her tax return.
Calculating the income you and your spouse or common-law partner have to report
If you contributed to any spousal or common-law partner RRSP in 2004, 2005 or 2006 (regardless of the year you deducted the contributions), you may have to include in your 2006 income all or part of:
- the amounts your spouse or common-law partner received in 2006 from any of his or her unmatured spousal or common-law partner RRSPs;
- any commutation payments your spouse or common-law partner received in 2006 from any of his or her matured spousal or common-law partner RRSPs;
- the amounts we consider your spouse or common-law partner to have received in 2006 from any of his or her deregistered spousal or common-law partner retirement savings plans; and
- the amounts your spouse or common-law partner received, or that we consider he or she received, in 2006 from any of his or her spousal or common-law partner registered retirement income funds (RRIFs) that are more than the minimum amount for the year.
Example of how much income to report on each spouse's return.
Use Form T2205, Amounts from a Spousal or Common-Law Partner RRSP or RRIF to Include in Income for 2006, to determine how much to include in your and your spouse's returns.
Exceptions
The rule that requires you (the contributor) to include certain amounts from spousal or common-law partner RRSPs or spousal or common-law partner RRIFs as income does not apply to the following situations:
- At the time of payment, or when we consider the payment to have been received, you and your spouse or common-law partner were living separate and apart because of the breakdown of your relationship.
- At the time of payment, or when we consider the payment to have been received, you or your spouse or common-law partner were non-residents of Canada.
- The amount is a commutation payment that is transferred directly for your spouse or common-law partner to another RRSP, to a RRIF, or to an issuer to buy an eligible annuity that cannot be cashed in for at least three years.
- The contributor dies in the year of payment or the year we consider the payment to have been received.
- We consider the deceased annuitant to have received the amount because of death.
In any such case, the annuitant spouse or common-law partner includes the payment in income for the year he or she receives it or is considered to have received it.
In all cases, the tax deducted has to be claimed by the individual to whom the slip is issued. In most cases, the information slip issued for the withdrawal will be in the name of the annuirant. However, report the income according to the calculations completed in Parts 1 and 2 of Form T2205.
