The Tax on Split Income (TOSI) rules are widely regarded as one of the most complex areas of Canadian personal tax law, and impose significant compliance and administrative costs on small business owners and their advisors.

Our submission to Finance Canada provides recommendations for simplifying the TOSI regime including:

  1. Excluding a business owner’s spouse age 25 and older from the application of the rules,
  2. Allowing professional and service corporations to use the “excluded shares” exemption, and
  3. Updating and consolidating the CRA’s guidance on the TOSI rules.

CALU’s recommendations would continue to support the federal government’s objective of preventing income sprinkling, while delivering other benefits including reducing the compliance burden on small businesses and their advisors through clearer, more objective rules.

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