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TOSI
The
rules for tax on split income (TOSI) were revised by the government for 2018.
Income subject to TOSI will be taxed at the highest tax rate. These rules aim
to eliminate tax benefits arising from splitting income between family members
who have not made a significant contribution to the family business.
The
rules surrounding TOSI pertains to the following types of investment income:
- Dividends
and shareholder benefits from Canadian private corporations
- Partnership
income derived from a related business or from a rental of a related person
- Trust
income derived from private corporation dividends/benefits, a related business
or a rental where a related person is involved
- Income
from debt (e.g. interest) from private corporation, partnerships or trusts
- Income
or gain from disposition of private corporation shares and other property where
the TOSI rules have historically applied
Important:
The government added many exceptions to the TOSI rules. If an exception
pertains to your situation, then the TOSI rules will not apply to you. This
means the particular income would be subject to the regular tax rate.
Please
take the time to review these additional links to assist you in understanding
as well as reporting TOSI.
