Whats a Spousal RRSP?
A Spousal RRSP is an RRSP that your spouse or common-law partner owns, but you contribute to. Why would you own one? To save on taxes. If your spouse or common-law partner has a lower income than you do, and thus a lower marginal tax rate, a Spousal RRSP can reduce your current and future taxes. First, you can claim a tax deduction for the contribution you make – just like a contribution to an RRSP in your own name- so you save on current taxes. Second, when your spouse or common-law partner takes money out of the Spousal RRSP, they report the income and pay the taxes. If their income were lower than yours, the taxes they pay would likely be lower than the taxes you would pay. In a Spousal RRSP if the owner withdrawals funds before the three years have elapsed the contributor will be the one who is hit with the taxes. Also the maximum contribution to a spousal RRSP is the investor’s own contribution room. The important point here is that the spousal plan does not increase the individua
