Tax Rules

Contribution eligibility

You must have available RRSP room to make an SPP contribution. SPP contributions should be reported on line 208 of your Canadian tax form. If you are carrying the contribution forward to deduct in future years, you must show it on Schedule 7. Both your application and your contribution must be received by SPP before a tax receipt will be issued.

SPP contributions will be taken into account in determining RRSP over-contributions.

Spousal contributions

Spousal contributions are permitted and, if the contributor has available RRSP room, he or she may contribute and receive a tax deduction for both their personal and their spouse's account. Spousal attribution rules apply to SPP.

If you name your spouse as beneficiary, death benefits from your account can be transferred directly to your spouse's SPP account or to an RRSP, RRIF, or guaranteed life annuity. Tax-deferred transfer options are also available if the beneficiary is a financially dependent child or grandchild.

Pension income splitting

All pension payments from SPP are taxable in the year received and are eligible for the $2,000 pension income credit and for pension income splitting. Each year you will receive a T4A for the benefits that you have received in that year. Withholding tax is determined using a schedule prescribed by Canada Revenue Agency (CRA). The current schedule is shown below.

Account Balance Rate of Tax Withheld
$5,000 or less 10%
$5,001 – $15,000 20%
$15,001 and over 30%

Key benefits

  • Personal tax deduction available
  • Spousal tax deduction available
  • Contributions and earnings are sheltered from tax until received as income
  • SPP annuity income is eligible for the pension income credit and for pension income splitting

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