The Corporation is family operated can split income to family members has be restricted:
- Childern under 18 years and older: working in busines 20 hours in the fiscal year during the 5 previous years 18 years or older to eligible for dividends with time sheets,
- Non-Service business 25 or older: less than 90% business income form services 10% vote shares (10% fmv) not a profesional corporation 10% is related business,
- investing busines shareholders contribute to business over 25 years, dividend reasonable market rates,
- retired 65 and up payment dividends over 65 exempt, pension income splitting allowed on dividends with affect the personal tax returns
Where TOSI (Tax On Splitting Income) applies, the disability tax credit, dividend tax credit and foreign tax credit can be used to reduce the individual’s tax payable for the year. The corporate business can no longer issue dividends to family members not involved in the business.
Whats new the family member?
Is actively working in the business from 18 to 24 years of age at least 20 hours per week in the latest 5 prior years are taking reasonable dividents. If the are 25 to 64 yers of age own 10% of voting hsares ( 90% or less business income for professional service corporations). The income reported with the proper documents will be exempt from excessive tax on the personal tax return of the family member, it does not affect the corporate taxes.
Consult with a Tax Professional:
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- It is essential to consult with a qualified tax professional for personalized advice tailored to your specific circumstances.
- A tax professional can help you navigate the complexities of TOSI and ensure compliance with the rules.
Note: Tax laws are subject to change. This information may not reflect the most recent updates, contact us BOOK AN APPOINTMENT!