Split Income

An amount that a trust allocates to a specified individual and that is taxable at the highest marginal rate. Such amounts consist of the following income and capital gains:

  • taxable dividends or benefits that the trust receives from a Canadian or foreign private corporation;
  • the income that can be reasonably deemed to be derived, directly or indirectly, from:
    • one or more related businesses in respect of the individual in the year,
    • the rental of property, if the person related to the specified individual is actively engaged on a regular basis in the activity of the trust related to the rental of property;
  • a capital gain realized on the disposition of shares in favour of a person not dealing at arm's length with the minor, where the minor is subject to tax on split income in respect of dividends paid on the shares (this capital gain is deemed a taxable dividend other than an eligible dividend);
  • the amount that is related to a debt obligation of the trust, if the trust is not a mutual fund trust, except for:
    • certain government debt obligations or debt obligations that are guaranteed by the government,
    • a debt obligation that is listed or traded on a public market,
    • a deposit standing to the individual's credit with a branch, located in Canada, of a bank or credit union;
  • the amount related to a property if:
    • it is a taxable capital gain or a profit derived from the disposition of the property after 2017 and allocated by a trust, and it is not otherwise included in the split income if the income derived from the property is split income for the specified individual,
    • the property is shares of a corporation (except shares of a class listed on a stock exchange or shares of the capital stock of a mutual fund corporation), a debt obligation (which is not listed or traded on a public market and is not a deposit standing to the individual's credit) or interest in a partnership or a trust (except a mutual fund trust or a trust that is deemed to be in existence by a congregation). If the property is not a share of a corporation, one of the following conditions must be met:
      • the amount is included in the individual's split income for the year or a previous year,
      • all or part of the FMV immediately before the disposition is attributable to the share of a corporation (except a share of a corporation listed on a stock market or a share of a mutual fund corporation).

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