Spousal RRSP

A Spousal RRSP is an RRSP that belongs to your spouse, but you make the contributions. You get the tax deduction, and the money grows in your spouse’s account. When your spouse eventually withdraws it in retirement, it’s taxed as their income, not yours.

The contribution comes from your own RRSP room. You’re not creating extra room by having a spousal account. You’re choosing to direct some of your contributions into your spouse’s RRSP instead of your own.

Why it matters

The main reason to use a Spousal RRSP is income splitting. If one partner earns significantly more than the other, they’re likely in a higher tax bracket. By contributing to a Spousal RRSP, the higher earner gets the deduction now (when their tax rate is high), and the lower-earning spouse withdraws the money in retirement (when their tax rate is lower). The result is less tax paid overall as a household.

This matters most for couples where there’s a big income gap. If both partners earn similar amounts, the benefit is smaller.

There’s one important rule to know: the three-year attribution rule. If your spouse withdraws money from the Spousal RRSP within three years of your most recent contribution, that withdrawal gets taxed as your income, not theirs. This is the CRA’s way of preventing people from using the account as a short-term income-splitting trick.

Example

Say one partner earns $120,000 and the other earns $35,000. The higher earner contributes $15,000 to a Spousal RRSP and gets a tax deduction at their marginal rate of about 43%. That saves roughly $6,450 in taxes now. In retirement, the lower-earning spouse withdraws that money at a much lower rate, maybe 20%. The household saves the difference on every dollar.

We go deeper into how Spousal RRSPs work and when they make sense in our Spousal RRSP guide.