As I record this weekly tip it is day 318 of 2017, which means there are 47 days left in the year. 47 days until the new TOSI rules come into effect. TOSI being what the cool kids call tax on split income.
The day grows ever closer, but we do not have any guidance on how the rules will be applied, since we have neither legislation nor any interpretation documents. We have been told that if we pay dividends to family members who are not active in the business that we will be charged the highest tax rate. We do not have a definition of what active in the business actually means, or examples.
How much activity will equal how much dividends? If your 19-year-old provides insight into how to market to millennials, gives you some tips on your website and Facebook page – can you then pay them $10,000 in dividends? The Canadian system has never before tied dividends to activity. Those bank shares you own in your RRSP don’t come with a list of duties.
How are we to interpret rules which are different than we have ever had? Is a dividend to be treated the same as a salary?
In any event we don’t know the answer – so – nag your MP’s again, these rules need to be deferred until the 2019 year so that we can find out how they work before they are applied.
Call your MP today.
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