I am hoping an expert can advise on whether TOSI applies to my situation. I have a private corporation (say PappaCorp) since 2018 where I own 100% of the class A shares. I received a T5 for dividends from PappaCorp in 2022 which I entered into TT T5 boxes 10, 11 & 12. Nobody else has ever received dividends from PappaCorp and I did not share (or split) the dividend income I received with my spouse. We are both under 65 and don't receive pension income. We received and entered foreign dividends from publicly traded companies which are split based on attribution to the original contributor.
In addition to browsing through TT community posts, I have read the CRA's documents "
Guidance on the application of the split income rules for adults"
Guidance on the application of the split income rules for adults - Canada.ca
and "T1206 Tax and Split Income". T1206 Tax on Split Income - 2022 Information - Canada.ca
I also reviewed the TOSI flowchart on Moody's site. Simplified TOSI Flowchart (Tax on Split Income) - Moodys Private Client
I understand TOSI was implemented to prevent income sprinkling which I don't do. The CRA definition is confusing to me because it says it includes taxable dividends of a private corporation but it doesn't actually say that income has to be split. The Moodys chart asks if I earned the following types of split income: Non-public corporation taxable dividends and shareholder benefits. Again, I received such dividends but they were not split in any way. I'm inclined to think TOSI does not apply but would appreciate input from any experts in this community.
It's right in the name "the tax on split income (TOSI)". If you don't split the income, then you don't have to worry about it. The whole purpose of the tax is to prevent high income earners from giving their money to lower income family members (who have done nothing to earn the money) so that it is taxed at a lower rate.