Family income splitting
Income splitting is an effective way to reduce your family’s overall tax burden
Family income splitting
Income splitting is an effective way to reduce your family’s overall tax burden for two key reasons:
- With Canada’s graduated tax rates, you pay a higher tax rate as your income increases.
- Every Canadian resident can earn about $9,000 tax-free due to the basic personal tax credit (varies by province).
By shifting income from a high-income parent to a low-income spouse or child, a family can realize tax savings of up to $15,000 per year (varies by province). If there are four members in a family, the potential tax savings could be as much as $45,000 annually.