Federal tax on split income ("TOSI")

As of January 1, 2018, in addition to the tax on split income (TOSI) applying to certain types of income of a child born in 2001 or later, the TOSI may now also apply to amounts received by adult individuals from a related business. Where TOSI applies, the disability tax credit can now be used to reduce the individual’s tax payable for the year. However, income that is subject to TOSI must now be added to the individual’s net income to calculate various deductions, credits and benefits.

Split income

  • taxable dividends on shares of a corporation (other than shares of a class listed on a designated stock exchange and those of a mutual fund corporation), that you received directly or through a partnership or a trust (other than a mutual fund trust)

  • shareholder benefits from the ownership of shares of a corporation (other than shares of a class listed on a designated stock exchange), conferred on you directly, or through a partnership or a trust (other than a mutual fund trust)
  • income you received from a partnership or a trust (other than a mutual fund trust or a trust relating to a communal organization), if the amount is considered to come directly or indirectly from one of the following: 1) a related business (see the Definitions section); 2) from the rental of property by a particular partnership or trust, if a person who is related to you at any time in the tax year

  • income related to a debt obligation (for example interest) that you received from a debtor corporation (other than a mutual fund corporation or a corporation with shares of a class listed on a designated stock exchange), partnership or trust (other than a mutual fund trust), if other amounts (for example dividends) that you received from the debtor would be subject to the tax on split-income (TOSI) rules.

  • taxable capital gain or a profit you realized from the disposition of a property, or income you received from a trust that is from a taxable capital gain or a profit of the trust from the disposition of property, if the following conditions are met:

    – the amount is not otherwise included in the definition of split income

    – the income from the property would also be split income if you received it