A spousal RRSP is a registered retirement savings account where one spouse contributes on behalf of the other, but the funds belong to the receiving spouse. This strategy can help reduce capital gains tax at the household level because when the receiving spouse withdraws money in retirement (likely at a lower income level), any capital gains realized within the RRSP will be taxed at their lower marginal rate. In essence, you're deferring and splitting investment income across two tax brackets instead of concentrating it with the higher earner. Capital gains are triggered when you sell investments at a profit. In Canada, 50% of your capital gain is taxable income (the inclusion rate in 2026 for gains up to $250,000, with a higher rate above that threshold). The more income you earn, the higher your marginal tax rate, and the more tax you owe on those gains. A spousal RRSP lets you shift that investment income to your lower-earning spouse.
Yes, you can contribute to a spousal RRSP regardless of your spouse's income. The contribution uses your own RRSP contribution room, not theirs. This is actually one of the main reasons couples use spousal RRSPs: to build retirement savings in the lower-earning spouse's name.
A spousal RRSP is owned entirely by the receiving spouse once the contribution is made. Joint RRSPs are no longer allowed by the CRA. If you want to split retirement income between both spouses, two separate RRSPs (one spousal, one yours) is the correct approach.
Capital gains are tax-deferred inside a spousal RRSP until withdrawal. You never pay tax on those gains while the money is in the account, no matter how long it stays. Once you or your spouse withdraw, the withdrawal is taxed as income at their marginal rate.
Yes, it applies to all withdrawals within three calendar years of the contribution, including capital gains. If you contribute in 2024 and your spouse withdraws in 2025, the entire withdrawal (including any gains earned inside the RRSP) is taxed as your income.
Both tools have benefits. Spousal RRSPs defer tax on capital gains until retirement; TFSAs eliminate capital gains tax permanently. TFSAs are simpler (no attribution rules) but have lower contribution limits. Ideally, high-income couples use both to maximize income splitting and tax efficiency.