Guidance on the application of the split income rules for adults 15 December 2017 CRA Webpage

Deference to taxpayer’s good-faith efforts to determine Reasonable Return

In determining whether the payment is a Reasonable Return [defined as...

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Example 1 (trust distribution to inactive under-25 child)

Opco dividend distributed by discretionary family trust to age-23 child who never worked...

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Example 3B (inactive spouse holding excluded shares)

Dividend paid by Opco (a components business) only on the class of voting discretionary...

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Example 4 (under 25 and over 20 hours)

Dividends from Farmco paid to a children’s trust and distributed to an age-20 child who works 20 hours...

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Example 5B (salary excluded)

Salary paid by Opco to a child (over 24) working 600 hours each summer in Opco business is not split income (s. 120.4...

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Example 12 (spouse over 65)

Spouse A and B, aged 65 and 60, own 95% and 5% of the shares of Investco, whose active business was actively managed...

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