CRA indicates that having non-contributing children as members of a family stock market partnership is subject to challenge under the old rather than TOSI rules

CRA confirmed that the tax on split income is inapplicable to a family partnership that invested in the stock market where the children had not contributed anything to the partnership or participated in the trading decisions or other management decisions, given the exclusions from “split income” for dividends on shares listed on designated stock exchanges and for taxable capital gains realized on such shares. However, CRA went on to indicate that given such lack of contribution of the children, it would review the application of inter alia ss. 103(1). 103(1.1), 74.1 and 96(1.8).

Neal Armstrong. Summary of 5 October 2018 APFF Roundtable, Q.12 under s. 120.4(1) – split income – s. (a)(i).