Did you know?: Spousal-RRIFs and the minimum withdrawal

Apr 26, 2019 | Christos Koutsavakis


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The second entry in our Did you know? series explains a sometimes overlooked fact about spousal-RRIFs.

Imagine this scenario: you have contributed to your spouse’s RRSP within the last few years, and now the RRSP is converting into a RRIF. When withdrawing from a spousal-RRIF (or spousal-RRSP), the taxable income may be attributed back to the contributing spouse if spousal contributions occurred in the year of withdrawal or the two previous calendar years. Ideally, the tax resulting from a withdrawal would be paid by the lower-income spouse, typically the one who did not make the contributions. This can be a problem if withdrawals occur soon after spousal contributions.

In a nutshell: the attribution rule does not apply to the mandatory RRIF minimum withdrawal and the owner of the RRIF, not the spousal contributor, is the one taxed.

One way this could really matter: it allows the higher-income spouse to make contributions to a spousal-RRSP even up to the point before it converts into a RRIF. As long as the RRIF withdrawals do not exceed the minimum, the higher-income spouse will not have taxable income attributed back.

See also: Spousal RRSPs