Let’s Talk About TOSI – New Rules 

By January 14, 2019CRA

The purpose of this upcoming series of short articles on the new income splitting rules is to address some of the questions you may have since the changes came into effect.

As you may know, these new rules became effective as of January 1, 2018, and were designed to prevent income splitting using private corporations.  The TOSI rules can apply to any income amounts, dividends and capital gains deemed as “split income”, including sale of property gains, corporate dividends and partnership income.

We’ll discuss how some of the advantages previously achieved from income splitting by family members have now been eliminated where it is felt that the individual has not made a sufficient contribution to the family business.

While there are many notable exclusions, there are three main categories of exclusions that have significant impact.  They are as follows:

Exclusion from TOSI for:

  • Excluded Businesses
  • Excluded Shares
  • Reasonable Returns

In the following articles on this topic we will look at these areas in detail, and discuss key points that we’re also happy to review with our clients on an individual basis.