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Pension-Splitting Assumptions
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Pension-Splitting Assumptions: Typical Senior Couples Spouses are assumed to be Canadian resident, and to have no other income than eligible pension income, Old Age Security and Canada Pension Plan income. Spouses are assumed to split eligible pension income so that each spouse reports an equal amount, subject to the maximum allocation of 50% of this income. For example, if one spouse has $40,000 in eligible pension income and the other has $10,000 in eligible pension income, it is assumed that both spouses report $25,000 in eligible pension income for tax purposes. |
The following assumptions/tax parameter values are used in the calculations for 2007:
NOTE: Parameters for the 2007 tax year have not yet been announced. For illustrative purposes, a 2.2 per cent inflation rate was used in the calculation of tax parameters.
Tax Brackets/Thresholds and Rate Structure:
- $0 - $37,178 – 15.5 per cent
- $37,178 - $74,357 – 22 per cent
- $74,357 - $120,887 – 26 per cent
- $120,887 and up – 29 per cent
Key Parameters:
Basic personal amount – $8,929
Age amount and threshold:
- Maximum amount, $5,177 (would have been $4,156 in the absence of the Tax Fairness plan)
- Net income threshold at which the credit begins to be phased out - $30,936
Old Age Security (OAS):
- Maximum Benefits, $5,954
- Net income threshold at which at which repayment begins – $63,511
Canada Pension Plan (CPP) maximum benefits – $10,298
Income Assumptions:
Typical Single Senior
In addition to eligible pension income, the senior also receives OAS and CPP benefits.
Typical Senior Couples
In addition to eligible pension income, seniors also receive OAS and CPP benefits.
Individual CPP benefits are assumed to be the lesser of the maximum benefits ($10,298) and five-twelfths of eligible pension income.
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In cases where both spouses do not receive the maximum CPP benefits, spouses are assumed to have elected to split the receipt of Canada Pension Plan benefits.
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| Last Updated: 2006-11-23 |
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