Mark, 68, has an individual net income of $85,000 in 2023. His spouse, Sarah, 67, has an individual net income of $30,000. Mark's pension income includes $15,000 from a private pension plan. Assuming both are 65 or older, what is the maximum amount of Mark's private pension income that could be allocated to Sarah for tax purposes in 2023, subject to the Income Tax Act rules?

Question: Mark, 68, has an individual net income of $85,000 in 2023. His spouse, Sarah, 67, has an individual net income of $30,000. Mark's pension income includes $15,000 from a private pension plan. Assuming both are 65 or older, what is the maximum amount of Mark's private pension income that could be allocated to Sarah for tax purposes in 2023, subject to the Income Tax Act rules?

Answer options:

• $0 ✅ $7,500
• $15,000
• The full amount, up to 50% of the pension income

Correct answer: $7,500

Explanation: Under the Income Tax Act, an individual can split up to 50% of eligible pension income with their spouse or common-law partner, provided both are 65 or older. Therefore, 50% of $15,000 is $7,500. This helps reduce the higher-income spouse's taxable income.