9. If pensioners intend to split pension income when filing their returns, can they ask for a reduction of tax being withheld from the eligible pension income during the year?

The CRA cannot approve a reduction of tax withheld at source based on an election to split pension income.

10. If pensioners intend to make this election when filing their 2007 returns, can they reduce their instalment payments?

Many individuals, including pensioners, are required to pay tax by instalments, and the CRA issues instalment reminders to them indicating the amounts to be paid by each instalment due date. However, as an alternative to paying the amounts shown on the reminders, instalment payments can instead be made based on either the individual’s prior-year net tax owing and CPP payable, or his or her estimated current-year net tax owing and CPP payable.

Under the current-year option, an individual can estimate his or her current-year net tax owing for 2007 based on the intention to split pension income. However, if the instalment payments are insufficient, instalment interest may be charged. More information about instalment payments and instalment interest charges is available in Pamphlet P110, Paying Your Income Tax by Instalments.

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