Pension income splitting is an important mechanism, and should be a feature in any Canadian financial planning software, that allows to transfer the taxable eligible pension income from one spouse to another for the purpose of decreasing their joint tax liability.
The pensioner is the individual who receives eligible pension income and who elects to allocate part of that income to his or her spouse or common-law partner called the pension transferee.
Automated Pension Income Splitting
We just rolled out a powerful new feature that allows you to automatically perform pension income splitting for your clients, so you no longer have to go through the process manually. That’s the advantage of a financial planning software – it fully automates the tedious parts of planning for you!
If you turn on Automated Pension Income Splitting in your scenario, Snap will calculate the optimal amount of taxable income to be shifted from one spouse to the other, up to the allowable maximum in each year.
Defined Benefit pension income, RRIF income, and LIF income are all eligible for splitting.
This way, with just one click you can help your clients minimize their total tax liability. This leads to instant savings for your clients.
To enable this feature in Snap, click Settings on the client’s main scenario page and select Scenario.
Under Advanced Settings, check the “Enable Pension Income Splitting” box.
Once automated Pension Income Splitting is turned on, you will see the exact amount being split for each year as a negative value in a client’s scenario page, and a corresponding positive value in the same column on the spouse’s scenario.
If you would like to learn more about automated income splitting feature in Snap Projections financial projections software, click here to book a demo call with us.
We are very excited about this new feature and we hope it will help you develop better projections for your clients in less time.