Which of the following is a requirement for income splitting?

Income splitting is a tax strategy that allows couples to allocate income between themselves to potentially reduce their overall tax burden. In Canada, one specific form of income splitting applies to individuals aged 65 or older, particularly in the context of pension income.

When an individual is 65 years or older, they can split their eligible pension income with their spouse or common-law partner. This can include income from registered pension plans, registered retirement savings plans (RRSPs), and certain annuities. The intention behind this is to allow couples to take advantage of the lower marginal tax rates that may apply to one partner’s income, thereby reducing the total tax owed.

Understanding that other demographics may not qualify for this particular income splitting highlights its specific requirement. Therefore, being aged 65 or older is essential for this income-splitting strategy to apply effectively.