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Tip of the Week
The new income splitting rules (TOSI – tax on split income) in the 2018 federal budget apply to income earned through a partnership as well as income earned by a corporation. There has not been as much discussion about partnerships as there has been about paying dividends.
If you are in a partnership with your spouse and have been splitting the income 50 /50, understand that this allocation has to be based on the amount of work that each of you do for the business, or one of the other exclusions have to apply. The other exclusions would be that you are selling products, not services. Or that the age limit of 65 applies, or that a partner who is not currently active in the business was active for 5 years previously.
Take a look at our previous posts on TOSI for more details on these exclusions. The message today is that if you thought that you did not have to worry about TOSI because you are in a partnership – that your conclusion was wrong.