Income tax – Income splitting, a new era
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General objectiveThis training activity covers the tax benefits of income splitting, provides a detailed review of relevant income tax legislation, including the expanded TOSI rules, and reviews remaining opportunities to accomplish income splitting. Participants will have an opportunity to apply the tax legislation to various examples/case studies, to simulate practical real-life situations.
Families that function as a single economic unit can benefit from tax savings if income can be shifted to lower-income family members. This is referred to as income splitting. The Income Tax Act contains several measures related to income splitting. Some are permissive; most are restrictive.
The latest of these – the expanded “tax on split income” (TOSI) rules – became effective in 2018, and. their implications are far-reaching and punitive. Consequently, many former structures and plans will no longer achieve the intended results and may trigger adverse income tax consequences. In addition, some situations may be caught when income splitting was not an objective.
- apply various "traditional" rules in the Income Tax Act that operate to specifically allow or prevent income splitting; apply the recently
- expanded tax on split income ("TOSI") legislation to different situations;
- identify former income splitting techniques that no longer achieve intended results;
- recognize new potential strategies for income splitting..
- Introduction/overview of income splitting
- Traditional rules that impede income splitting
- Expanded tax on split income ("TOSI") legislation
- Recent CRA commentary on expanded TOSI legislation
- TOSI examples/case studies
- Strategies for successful income splitting