How to complete T1206?

[needen]

My husband received dividends (come with T5) from my corporation. Under the new TOSI, the rules apply to him. So I will need to complete T1206.  I entered T5 amounts for him and re-enter the amounts in T1206. Am I doubling the tax? Any instructions on how to complete the T1206?

[TurboTaxLise]

The T5 dividends go to line 120 of your T1, whereas the amounts from your TOSI form reflects on line 232. Therefore, they are not related amounts, they will not double.  Schedule 1 line 424 will reflect tax payable.

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.

TOSI PDF instructions: https://bit.ly/2O4n7Z7

Line 424 - Federal tax on split income - https://bit.ly/2UvDXT1

From the CRA Income sprinkling - https://bit.ly/2HN559x