How to adjust the management of family finances according to the income gap between the two spouses and parents? Without ceasing to optimize taxation and the progression of family wealth?
Posted at 7:00 am
Julie, 41, and Stéphane, 48, are common-law spouses and parents of children ages 2 and 10. Your budget and financial situation is well established so far, with a family balance in good financial condition (about $515,000) between the main asset -nominative savings accounts and others, family home- and the liability of the home mortgage loan balance family. .
However, seeing the gap between their earnings from work growing over the years, Julie and Stéphane want to review their equal distribution of family budget outlays and savings to align them in proportion to their respective earnings in total family income.
With their current numbers, that would mean going from a 50%-50% split to a 60%-40% split. Likewise, Julie and Stéphane wonder about the impact of such a review of their budget allocation on optimizing their fiscal situation and their medium- and long-term financial planning.
“For several years, our labor income has not grown at the same rate, while we continue to share the family budget in equal parts,” says Julie during an interview with Press.
“In this context, how could we restore greater equity between our share of the family income and our share of the family budget? Would it be a good idea to share expenses in proportion to income? Julia asks.
“Or should we rather make matching contributions between spouses in our registered savings accounts (RRSP, TFSA, RESP), especially in favor of the spouse with the lowest income? In this case, what impact on our personal and family taxation? »
Julie and Stéphane’s situation and questions were sent for analysis and advice to Mathieu Huot, financial planner and tax specialist at IG Wealth Management in Montreal.
Julia, 41 years old
Income (employment + 50% family allowances): approximately $74,000
- RRSP: $11,000 ($28,000 in unused contributions)
- TFSA: $31,000
- As part of employment-related pension fund assets: $113,200
Stephane, 48 years old
Income (employment + 50% family allowances): approximately $52,000
- RRSP: $65,000 ($38,000 in unused contributions)
- TFSA: $34,000
- Unregistered Investment Savings Account: $58,000
- Participation of assets in an employer pension plan: 15 years of participation in the Quebec public sector RREGOP
- PRV: $22,700
- Family residence: approximately $370,000
- Mortgage Balance: $189,000 (set at 2.35% for September 2026)
- Annualized major disbursements: approximately $60,000
- Residency-related: approximately $27,000
- Lifestyle Related: Approximately $33,000
From the beginning, Mathieu Huot congratulates Julie and Stéphane’s desire, as spouses and common-law parents, to review their financial situation based on their income gap.
By conducting this review when your family finances are well settled and your family status documents are up to date (cohabitation agreement, incapacity mandates, wills, etc.), Julie and Stéphane reduce the risk of legal and financial problems. in case of breakup of the parental couple or a serious incident that may affect the family lifestyle.
Mathieu Huot, financial planner and tax specialist at IG Wealth Management in Montreal
It also appreciates your concerns about building a savings asset (children’s education, retirement) while your main liability, the home mortgage loan, is financed on concessional terms (fixed rate of 2.35% for 2026) and , therefore, with low budget risk. pressure for four years.
Furthermore, at the current payment rate, with an average rate of 3% over the years, Mathieu Huot estimates that this mortgage liability could be wiped off the balance sheet of Julie and Stéphane’s family in a dozen years. That is, around 2034, four or five years before Stéphane’s retirement, at the age of 65.
“Your family budget would then be relieved of a large outlay. And this, while Julie and Stéphane will prepare for their retirement from work”, says Mathieu Huot.
“Then they can decide a simultaneous withdrawal at 65me Stéphane’s birthday and thus passed at age 58 for Julie with the impact on her retirement savings. Or stick to separate withdrawals in your 65me respective birthday, which would minimize the impact on their retirement pensions and the continuity of their lifestyle. »
That said, Mathieu Huot points out that Julie and Stéphane could improve their financial situation by optimizing the use of their savings capacity, which he estimates to be around $20,000 a year based on the budget figures provided.
And this, taking into account their objective of a better distribution of the family budget and of the contributions in the savings assets based on their income gap.
First, Mathieu Huot recommends that Stéphane use his $58,000 financial assets in an unregistered, taxable investment savings account in his tax-advantaged TFSA.
“He can proceed with this transfer of funds as his financial assets are monetized, as well as the amount available from the TFSA contribution. But the longer this transfer of funds takes, the more he will be deprived of tax exemption on income and investment gains in a TFSA account, ”recalls the financial and tax planner.
RESP for children
Second, Mathieu Huot recommends that Julie and Stéphane maximize their two children’s Registered Educational Savings Plan (RESP) contributions to avoid “wasting” the tax subsidy at 30% of the eligible annual contribution amount.
“They should prioritize their 10-year-old’s RESP to maximize contributing to the $2,500 per year eligible amount, as well as ‘catch-up’ unused contributions from prior years before they reach the 17-year-old limit.” explains Mathieu Huot.
“For the smallest of 2 years, establishing a PRAE is also important for family finances in the medium term. However, parents will have more years to catch up in case a budget bump occurs over the years. »
In addition, adds Mr. Huot, nothing prevents Julie and Stéphane from modulating their contributions to their children’s PRAE based on the evolution of their respective labor income.
“This distribution of contributions agreed informally between the parents is easily achieved because the 30% tax subsidy is deposited in the RESP account of each child, and not as a tax credit for the benefit of the taxpayer, as is the case with the Registered Retirement Plan. Savings (RRSP). »
Spouse Contributed RRSP
Third, Mathieu Huot suggests that Julie and Stéphane take advantage of an unknown provision of the RRSP.
“This is a spousal RRSP account, which allows an account to be opened in the name of a spouse, but whose registered taxpayer – and therefore beneficiary of the tax credits – is the other spouse”, explains Mr. Huot.
“Its main advantage in the economy and family taxation is allowing the spouse with higher income to contribute to the RRSP of the other spouse with lower income, while optimizing the tax credit for these contributions thanks to the higher tax rate for the taxpayer. -spouse with higher income. »
In the case of Julie and Stéphane, Mathieu Huot estimates that the difference in their earnings results in a difference of ten percentage points between their respective tax rates.
“By doing so, they will be able to optimize their family taxation over the years, while achieving their objective of a better distribution of family budget disbursements and investment savings according to the difference between their respective incomes. »
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