Can co-owners of a rental property split the income unequally even though they own it 50/50?

Generally, no - if you and a co-owner actually own a rental property 50/50, you can't simply choose to report the income in a different split to shift more of it to whichever of you is in a lower tax bracket. Your reported share is meant to track your real ownership and economic interest in the property, not whatever allocation produces the best tax result.

CRA looks at who actually contributed the funds to buy the property and who bears the real economic risk and reward of ownership, and there are attribution rules that can reallocate income back to whoever genuinely funded the purchase if an unequal split doesn't match the real ownership picture, particularly between spouses or close family members. This doesn't mean co-owners are always stuck reporting equally; if the true ownership interest genuinely isn't 50/50, for example because one person contributed more of the purchase price and holds a larger documented interest, the reporting should reflect that real interest. The issue is choosing a split for tax purposes that doesn't match the underlying ownership and funding, which is the part CRA scrutinizes closely.