# How to Optimize Tax Efficiency for Couples

By Julie Cazzin with Andrew Dobson

Many couples wonder about the best ways to optimize tax efficiency when it comes to managing their assets. One common question is whether it’s possible to transfer assets “in-kind” from one spouse’s brokerage account to the other to spread the tax liability. In this article, we explore this question and provide insights into other tax-efficient strategies that couples can employ.

## Can I Transfer Assets to My Spouse’s Account to Spread Tax Liability?

You can transfer assets to your spouse in-kind, but it may not necessarily help your tax situation due to spousal attribution. Spousal attribution rules mean that future income and capital gains from transferred assets may still be taxable back to you. This rule prevents higher-income spouses from avoiding taxes by transferring assets to lower-income spouses.

## Other Tax-Efficient Strategies for Couples

– **Contributing to Registered Accounts**: You can contribute to your spouse’s registered accounts, such as their TFSA and RRSP, without worrying about spousal attribution.

– **Spousal RRSP**: Setting up a spousal RRSP allows you to deduct contributions from your income while enabling your spouse to withdraw funds based on their tax rates in the future.

– **Selling Investments Strategically**: Selling investments over multiple years can help spread tax liability, especially for large capital gains that could push you into a higher tax bracket.

– **Prescribed Rate Loans**: While less popular due to high interest rates, prescribed rate loans allow you to shift taxable assets to your spouse to earn income at lower tax rates.

## Conclusion

While transferring assets in-kind may not be the most tax-efficient strategy for couples, there are other ways to optimize tax efficiency. By leveraging registered accounts, strategic selling of investments, and utilizing prescribed rate loans, couples can ensure they are making the most of their assets while minimizing tax implications.

For personalized financial advice tailored to your specific situation, consider consulting with a certified financial planner. Andrew Dobson, a fee-only, advice-only CFP and CIM at Objective Financial Partners Inc., offers expert guidance on optimizing tax efficiency for couples. You can reach him at [email protected].

**FAQ**

**Q: Is transferring assets in-kind a tax-efficient strategy for couples?**
A: While it may not always be the most effective strategy due to spousal attribution rules, there are other tax-efficient options couples can explore.

**Q: What is a spousal RRSP?**
A: A spousal RRSP allows one spouse to make contributions to their partner’s RRSP, providing tax benefits based on their partner’s tax rates when funds are withdrawn.

**Q: How can couples optimize tax efficiency when managing their assets?**
A: Couples can utilize registered accounts, strategic selling of investments, and prescribed rate loans to minimize tax implications and maximize wealth accumulation.