Thank you for choosing TurboTax. In order to fill you TOSI, you have to fill in information for your T5--> while reviewing your summary TurboTax says you are eligible for TOSI (only if your percentage for dividends was 50% to your spouse) --> It asks you to review your Tax on Income Split and after clicking on "it applies to me" --> It will bring you the TOSI form.
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.
For further information please check out our blog: How does the Pension Splitting Optimizer work?
And TOSI instruction as per CRA
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