Spousal RRSP - Who is reporting?

[flash_os]

Annuitant or Contributor?

[TheTaxSmith]

The Contributor will take the deduction always. However the Contributor needs to allocate that deduction as contributing to their own RRSP if the Contributor and the Annuitant are the same person OR as a Spousal contribution if the Annuitant is different (spouse). The Contributor gets the deduction. The Annuitant owns the investment and is not always the same as the Contributor.

[flash_os]

Thanks.
In this case: I'm Annuitant and Contributor is my wife.

So on uFile report I will need to report on my wife's (as she Contributor) tax return file, correct?

But we contributed together to that SRRSP from our joint account.
So I need to add my name to Contributor list as well, so there will be 2 names as Contributors?
Or is above not relevant since uFile will choose allocation according to higher tax bracket?

[TheTaxSmith]

Hi flash_os,

Yes your wife is the Contributor so she reports the RRSP deduction. You are the Annuitant and own the RRSP but will not claim any deduction.

There can not be two contributor names on the slip as only one person can be the Contributor. It doesn't matter where the money comes from.

Ufile will not make any choices with respect to the RRSP allocation. The Contributor deducts provided you claim the RRSP on the Contributor's return which you are required to do. Don't make the mistake of claiming the RRSP on the Annuitants file.

Trust that helps.

[flash_os]

Thank you.
So In order to use my RRSP contribution  room I will need to open another SRRSP with my name as Contributor and my wife as Annuitant, right?

[TheTaxSmith]

To use your contribution room you will have to purchase an RRSP within the first 60 days of 2021 for a 2020 deduction. It can be either a contribution to your own plan or you could make the contribution into a spousal plan.

If you contribute to your plan then make sure your social insurance number is listed as both the Contributor and as the Annuitant.

If you contribute to a spousal plan then make sure your social insurance number is listed as the Contributor and your spouse's social insurance number is listed as the Annuitant.

[flash_os]

Found another great explanation (from Questrade) for Spousal RRSP:

A spousal RRSP is an investment account that allows you to help save for your spouse or common-law partner’s retirement. Plus, it comes with a few extra perks regarding tax breaks and withdrawals.

How does it work?

Spousal RRSPs are ideal for couples who want to invest in a nest egg together, and are ripe with tax-related benefits for both partners. Contributions to the account are tax-deductible, which is beneficial for the higher-earning spouse. Meanwhile, the lower-income spouse can reap tax-deferred growth from the spousal RRSP’s investments. Plus, the lower-income spouse would be taxed at a lower rate upon withdrawal from the account.

When opening a spousal RRSP you need to set a contributor* and the account holder. Also known as an annuitant, the account holder (typically the lower-income partner) owns the RRSP and will ultimately be withdrawing from it. Meanwhile, the contributor (typically the higher-income partner) can make tax-deductible contributions to the account.

Let’s look at an example to see how it works. Alex and Sam open a spousal RRSP together, and they name Alex as the contributor because she has a higher salary. Since Alex will be in a higher tax bracket, her contributions to the spousal RRSP will provide valuable deductions on her income taxes. Meanwhile, Sam can reap tax-deferred growth from the spousal RRSP’s investments, which could include stocks, ETFs, or other products available through a standard RRSP.

[serafinatoyou]

Hi sorry this may be a repeat but we opened a spousal RRSP last year. I am paying towards my husbands RRSP. I was told to just add it in my husbands tax but I am thinking that is not correct. Where do I put this in my return. I want to be sure he gets the credit for it on his return.

Thanks for the help.