On December 13, 2017, Finance issued its simplified (?) private company tax measures to address tax planning involving income splitting (sprinkling). These revised measures will apply to the 2018 and subsequent taxation years.
The tax on split income (TOSI) rules apply the highest marginal rate of personal tax to income that is “split income” received by a “specified individual” and that is not an “excluded amount”. Lots of definitions, many of which have supposedly been simplified in the latest release. There is still a high degree of complexity is how some of the exclusions are to be met.
Instead of trying to write from scratch what others much smarter than me have already done, let me know and I'll forward you some articles fully explaining the proposed tax changes.
The net is that we are all going to have to be careful going forward if there is any potential that the TOSI rules could possible apply. As always, if you have questions, please come in and see me and we can review your position together.
2017 tax planning
The year-end is coming fast and there are a number of items that you might want to consider before 2018 gets here. With the proposed changes to the income splitting rules and corporate passive income limitations this might be the last chance to make certain decisions or elections.
As always, on a personal note, expenditures other than RRSP's must be made before January 1st in order to be deductible for 2017. Donations for example might be doubled up in 2017 to achieve a greater tax saving or certain medical expenses incurred early (or late) to maximize the credits available.
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R Brenton Driscoll, CPA, CA
Closed from noon December 22nd
until January 2nd, 2018
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(closed @ noon for a hour)
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