Mr. and Mrs. Chang are both 72 years old. Mr. Chang receives $60,000 from his defined benefit pension, and Mrs. Chang has no income. They are both in the 20% marginal tax bracket federally and provincially combined. How much tax could they save if Mr. Chang splits the maximum allowable pension income with Mrs. Chang, assuming she has no other tax credits or deductions?

Question: Mr. and Mrs. Chang are both 72 years old. Mr. Chang receives $60,000 from his defined benefit pension, and Mrs. Chang has no income. They are both in the 20% marginal tax bracket federally and provincially combined. How much tax could they save if Mr. Chang splits the maximum allowable pension income with Mrs. Chang, assuming she has no other tax credits or deductions?

Answer options: ✅ $0

• $6,000
• $12,000
• $24,000

Correct answer: $0

Explanation: Pension income splitting only leads to tax savings if there is a difference in marginal tax rates between the spouses. Since both Mr. and Mrs. Chang are in the same 20% marginal tax bracket, splitting income will not result in any tax savings, although it effectively transfers income from one spouse to another for tax reporting purposes.