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 a 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 a share of a corporation (except a share of a corporation listed on a stock market or a share of a mutual fund corporation).

Section 766.3.3