Tax Strategies for Newlyweds

Allan Madan, CA
 Nov 11, 2013

This short article is called tax tips for newlyweds. If you recently got married and have a hangover from the bill, this article is certainly for you.

Contribute to Your RSPs:

The first of the tax tips for newlyweds is to contribute to RRSPs. I know what you’re saying, I just had a wedding and I don’t have any more money to contribute, but please listen to me. By contributing you will receive a tax deduction immediately on your tax return. Plus, with the magic of compounding those earnings will grow tax free inside your RRSP (to a really large sum) overtime.

In addition, consider making a spousal RRSP contribution if you have a lower income spouse. The spousal RSP contribution is tax deductable to you and when your lower income spouse eventually withdraws the funds from his or her RSP, the amount withdrawn will be taxable to the lower income spouse. That way you will save taxes overall.

Contribute to a Home Buyer’s Plan:

The second of these tax strategies for newlyweds is to contribute to a home buyer’s plan. The biggest purchase that any newly married couple will make is buying their first home. Fortunately, there is the homebuyer’s plan that allows you to save for this purchase. Contributions made to the homebuyer’s plan work exactly like a RRSP. The actual contribution made is tax deductable and the earnings grow tax free.

Also, you can take the money out of the homebuyer’s plan to finance the purchase of a home and the funds withdrawn are completely tax free. There is a limit otherwise this strategy would be too good to be true. The maximum amount that you can contribute to the homebuyers plan is $25,000, or as a married couple, which this article certainly geared to, is $50,000.

Thinking Children, Think RESP:

Is there a child on the way? I don’t mean to scare you but the educational cost for children are skyrocketing. By the time your child is ready to attend the college or university the cost could be in tens of thousands of dollars each year. So, it’s important to save for your child’s education. Fortunately, the government does have the RESP plan.

Contributions to the RESP plan are not tax deductible, but the amount invested in the RESP grows completely tax free. So, if you invest wisely a small contribution today, with the magic of compounding, can grow to a very large amount by the time your child is ready to go to post secondary education.

Another benefit is the government provides a matching grant of up to 20% of the amount contributed. There is a maximum, meaning that the matching grant cannot be more than $500 in a year. Another amazing benefit of the RESP is that withdrawals from the RESP are taxed to your child. So, unless your children are rock stars, it’s unlikely that they are making lots of money, and they will pay little to no tax on the RESP funds received.

Income Splitting:

The fourth tax strategy for newlyweds is income splitting. Having a discussion about the family budget is probably a very contentious issue but it’s one that has to happen. Consider having the higher income spouse pay for all of the household bills. If you are the higher income spouse you are probably screaming at me right now but there is logic to it. By having the higher income spouse pay all the bills, it frees up the income of the lower income spouse for savings.

You can reinvest the savings in income producing assets and the income earned will be taxed to the lower income spouse. Because the lower income spouse is in a lower tax bracket he or she will likely pay a lot less tax on the money earned.

Childcare Expenses:

The fifth of these tax strategies for newlyweds requires that you claim childcare expenses. Childcare expenses are deductible by the lower income spouse and they include things like day care, babysitting, and after school programs. Make sure you keep your receipts as proof of the amount paid to your childcare provider because it’s likely the CRA will ask to see those receipts.

Thank you for reading this article about tax strategies for newlyweds. Please comment, because it helps me produce more relevant content. For more tips and tricks please visit my website, and get access to your free report, ‘20 Tax Secrets on How to Beat the Tax Man’.


The information provided on this page is intended to provide general information. The information does not take into account your personal situation and is not intended to be used without consultation from accounting and financial professionals. Allan Madan and Madan Chartered Accountant will not be held liable for any problems that arise from the usage of the information provided on this page.

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