- Pension income splitting lets you allocate up to 50% of eligible pension income to your spouse on paper, without moving any actual money.
- The optimal split is rarely a flat 50/50 — this calculator searches every allocation to find the true minimum tax point.
- Splitting can reduce or eliminate OAS clawback on the higher-income spouse, since clawback is based on individual net income.
- Hunch's retirement planner models couples together, including pension splitting and claiming-age optimization.
How the income splitting calculator works
Enter both spouses' ages, other income, eligible pension income, and OAS received. The calculator tests every possible split percentage from 0% to 50% and finds the allocation that minimizes your combined household tax bill, including the effect on OAS clawback.
The math: minimizing combined tax across every possible split
For each candidate split percentage, the calculator recalculates both spouses' taxable income (moving the specified share of eligible pension income from one spouse to the other), computes each spouse's tax owing at that split (including any OAS clawback triggered by net income), sums the household total, and picks the split with the lowest sum. This exhaustive search catches cases where a partial split beats a full 50/50 split — which a simple "just split it evenly" approach would miss.
Worked example
A 70-year-old with $50,000 in eligible pension income and a spouse with lower other income might find that splitting 45% (rather than the maximum 50%) minimizes combined tax, because pushing the lower-income spouse too high starts costing more in their bracket than it saves in the higher-income spouse's bracket — plus reducing OAS clawback exposure on the higher earner.
Key terms
- Eligible pension income
- RRIF or annuity income (if 65+) or DB pension/annuity income (at any age) — the income types that qualify for splitting under CRA form T1032.
- OAS clawback
- The Old Age Security recovery tax, which reduces OAS payments once an individual's net income exceeds a set threshold — based on each person's own income, not household income.
- Pension income splitting
- A joint tax election allowing up to 50% of eligible pension income to be reported on the lower-income spouse's return, without any actual transfer of funds.
- T1032
- The CRA form both spouses jointly file each year to elect pension income splitting.
