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You are here: Home / Blog / Division of Property / Can my wife and I divide our RRSP money without feeling the tax consequences now?

Can my wife and I divide our RRSP money without feeling the tax consequences now?

September 7, 2018 By Stephanie Dobson

Yes.  It is very common in separation agreements or court orders to separate property that RRSPs are also subject to a division, or effectively redistribution, between former spouses.  Canada Revenue Agency (CRA) imposes certain technical requirements on you and your spouse before it will allow such a division.  The first hurdle: you and your spouse must be living separate and apart.  In addition, the division must arise as a result of your separation and it must form part of a written agreement or a court order relating to a division of property.

Once you have satisfied these requirements, you must now inform CRA of the division by completing Form T2220.  This form tells CRA that you have done a transfer of the RRSP because of the marriage breakdown and that you should not have any tax consequences now.

Although it is usual to have these transfers done upon finalizing a property settlement, CRA does not impose any time limits on making the transfer from one RRSP to another.  Therefore, the transfer may be done years later, for instance, as a form of future spousal support.  The general rule is that once the transfer is done, Form T2220 must be filed with CRA – whenever that transfer actually occurs.

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