Our net family property statements say that I should receive XX sum but the draft separation agreement has another number and says:
the equalization shall be paid by means of spousal rollover pursuant to the income tax act from the RRSP holdings and that in order to effect the transfer, the equalization payment shall be grossed up for taxes as enumerated in the net family property by 25%.
My questions are as follows:
A) Is tax paid on equalization payments? This doesn't seem right to me, particularly when the majority of the equalization is as a result of equity in the matrimonial home. It's not a capital gain.
B) We don't have this kind of money in RRSPs and it was my exes intention to re-mortgage the house in order to provide me with the equalization. Can anyone who has been through this explain how the transfer of funds from one spouse to the other happens? Is it through RRSPs and if not, it's treated as taxable income? I'm confused and would rather not pay our mediator to explain it to us.
Thanks.
the equalization shall be paid by means of spousal rollover pursuant to the income tax act from the RRSP holdings and that in order to effect the transfer, the equalization payment shall be grossed up for taxes as enumerated in the net family property by 25%.
My questions are as follows:
A) Is tax paid on equalization payments? This doesn't seem right to me, particularly when the majority of the equalization is as a result of equity in the matrimonial home. It's not a capital gain.
B) We don't have this kind of money in RRSPs and it was my exes intention to re-mortgage the house in order to provide me with the equalization. Can anyone who has been through this explain how the transfer of funds from one spouse to the other happens? Is it through RRSPs and if not, it's treated as taxable income? I'm confused and would rather not pay our mediator to explain it to us.
Thanks.
Comment