Income tax and your pension

Your pension payments, including your CAAT Plan pension as well as your Canada Pension Plan and Old Age Security, are taxable income. Each month, income tax is deducted from these payments. To help avoid a tax bill at the end of the year, you can choose to increase the tax deducted from your payments.

This can be especially useful if you receive income from other sources, such as investment or employment earnings. To make this adjustment, contact us to request Personal Tax Credits Return forms. These forms detail the types of claims and deductions for which you may be eligible. Once you have completed and returned them, we can adjust the amount of tax withheld from your pension.

Pension income splitting

You or your spouse may be able to reduce your overall income tax by splitting your CAAT Plan pension. The spouse with the higher retirement earnings can allocate up to 50% of earnings to the lower-earning partner.

To split your pension, request a T1032 Joint Election to Split Pension Income form from the Canada Revenue Agency (CRA). You and your spouse have to complete separate forms and file them with your income tax each year.

Splitting your pension income may be beneficial to you and your spouse depending on your situation. Certain conditions – such as your ages and the type of income you are receiving – have to be taken into consideration. The CAAT Plan is not the best source of advice on the subject, as we do not know your individual circumstances. It’s a good idea to contact  CRA or an independent financial advisor to determine if pension income splitting is right for you.