Mr. and Mrs. Lee are both 68 years old and retired. Mr. Lee receives an annual RRIF income of $40,000, and Mrs. Lee receives $10,000 annually from a private pension. They are both in the 25% marginal tax bracket. What is the maximum amount of pension income Mr. Lee can split with Mrs. Lee to reduce their overall tax burden?

Question: Mr. and Mrs. Lee are both 68 years old and retired. Mr. Lee receives an annual RRIF income of $40,000, and Mrs. Lee receives $10,000 annually from a private pension. They are both in the 25% marginal tax bracket. What is the maximum amount of pension income Mr. Lee can split with Mrs. Lee to reduce their overall tax burden?

Answer options:

• $5,000
• $10,000 ✅ $20,000
• $40,000

Correct answer: $20,000

Explanation: Eligible pension income, which includes RRIF payments after age 65, can be split up to 50% with a spouse. Mr. Lee receives $40,000 from his RRIF, so he can split a maximum of 50% of this, which is $20,000, with Mrs. Lee.