Income splitting

[bigbadboss101]

Have you done incoming splitting before without much hassles from the CRA? This is the first year I put my wife as a shareholder. It happens that the Liberal government will be much tighter on or will eliminate this going forward. I am thinking 70/30 to be safe. Your experiences?

[Tik-Tok]

Didn't the Liberals get rid of income splitting?

[rage2]

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Didn't the Liberals get rid of income splitting?

Pretty much. For normal income the FTC is gone which was good for $2k. For corporations, the feds put some rules around income sprinkling. You file it and roll the dice and see if the CRA deems your spouse contributes enough to the business. If CRA decides otherwise, fine and penalty haha. Basically, at least 1/2 her working hours has to be working for the business, but it's completely open to however CRA wants to interpret it. On paper it's deemed as 20 hours per week.

Fuck the liberals.

[ExtraSlow]

But you can still do shareholder dividends to anyone, right? Not that my corporation is making a profit, but I think that's still a thing.

[bigbadboss101]

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But you can still do shareholder dividends to anyone, right? Not that my corporation is making a profit, but I think that's still a thing.

That is what my accountant is suggesting. % wise I have to decide.

[rage2]

The new rules for dividends specifically targets dividends to spouses and children. I'll have to dig it up, read about it a couple weeks ago.

edit - here's an article talking about the rule changes.

http://business.financialpost.com/pe...-your-business

Your battle is to prove the involvement of family members within your business, and if you've ever dealt with CRA, it's a pretty arbitrary process. If you lose, you lose the $2-3k in savings, plus penalties, plus interest.

End of the day, talk to your accountant. I'm not a tax professional, just know the gist of the changes and what battles not to pick with CRA.

[Buster]

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The new rules for dividends specifically targets dividends to spouses and children. I'll have to dig it up, read about it a couple weeks ago.

edit - here's an article talking about the rule changes.

http://business.financialpost.com/pe...-your-business

Your battle is to prove the involvement of family members within your business, and if you've ever dealt with CRA, it's a pretty arbitrary process. If you lose, you lose the $2-3k in savings, plus penalties, plus interest.

End of the day, talk to your accountant. I'm not a tax professional, just know the gist of the changes and what battles not to pick with CRA.

Best advice in the thread. This is why a good accountant is so critical. It's not just about know the rules, which is hard enough, it's about knowing how to avoid the CRA's preferred battlefields.

[ExtraSlow]

My business needs to have its best year ever to even start paying me back expenses, let alone salary or dividends.

Hahaha.

[suntan]

2017 was the last year you could arbitrarily income split. I'm not sure what you mean by "this year".

[rage2]

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Best advice in the thread. This is why a good accountant is so critical. It's not just about know the rules, which is hard enough, it's about knowing how to avoid the CRA's preferred battlefields.

Guaranteed that this is going to be easy pickings for the CRA. It'll cost you more to fight their decision than to pay the difference/penalties. It's pretty much a registered owners speeding ticket rule.

All this nonsense for $250-300m of tax revenue targeting the middle class (Libs pegged the revenue at an even lower $120m). Thanks for the penny pinching Trudeau.

[speedog]

Hah, we are doing income splitting but I am old enough to be collecting a pension which is split at tax time between my wife and I for some tax savings.