Income sprinkling

On July 18, 2017, the Government released a consultation paper with proposals to address tax planning strategies using private corporations, including draft legislative proposals to address income sprinkling by extending the application of the tax on split income rules. Taking into account the submissions made with respect to the consultation, the Government released revised draft legislative proposals on December 13, 2017.


Notice to the reader

The consultation paper also outlined possible approaches to limit tax deferral opportunities that are associated with holding passive investments inside a private corporation. To limit these tax deferral opportunities, Budget 2018 proposes changes to the small business deduction rules and the dividend refund rules, effective for taxation years that begin after 2018.  These measures have received Royal Assent.

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