Tax News – December 14, 2017

On July 18, 2017, the Finance Minister tabled a tax reform plan with several measures designed to abolish certain tax planning strategies using private corporations. The legislative proposals published at that time provided for measures to limit the possibilities for an individual (entrepreneur-shareholder) from splitting his or her income with family members taxed at a lower rate by transferring certain income from a private corporation.

To counter this type of planning, the July 2017 proposals proposed to extend the rules governing the tax on split income (TOSI) currently applicable to minors, to make them applicable to some income earned by individuals aged 18 and over.

Last October, the federal government did an about-face on several aspects of its overall reform plan, but confirmed its intention to maintain measures to counter family income splitting, in a simplified version.

It is with this in mind that amended legislative proposals were published on December 13, 2017. These proposals reiterate the general structure of the TOSI amendments proposed last July, with some relief.