CRA indicates that dividend income flowed through to a preferred beneficiary can be TOSI
Para. (c) of the “split income” definition refers to amounts included in a beneficiary’s income under s. 104(13), but not under s. 104(14) as a result of a preferred beneficiary election.
CRA noted however that s. (a)(i) of the split income definition provides for the inclusion of taxable dividends received by the specified individual in respect of the shares of the corporation (other than listed or mutual fund shares). Thus, if the income allocated to a preferred beneficiary is also subject to a s. 104(19) designation, the designated amount will be included in the beneficiary’s split income, unless one of the TOSI exceptions applies.