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Tip 8 – Tax on Split Income | Tax on Passive Income

This note continues Tax Principal Raffaele Ruberto’s ten-week Friday Tax Tip series, helping business owners and their family members mitigate the new Tax on Split Income (“TOSI”) and upcoming Tax on Passive Income (“TOPI”) rules.

As always, if there are any topics you would like addressed, or have specific questions you need answered, just send an email to

Tax on Split Income | Tip 8

Qualifying shareholders of private companies may be allowed to extract dividends at capital gain rates.

This arrangement results in the shareholder being taxed on half of the compensation received from the corporation.

The after tax-funds can be used to split income with non-active family members.

Please contact SB Partners to learn more, or to discuss any of our signature TOSI Solutions.

Tax on Passive Income | Tip 8

For corporations earning active business income, it might be advantageous to use corporate funds towards the repayment of corporate debt or the purchase of active business income generating assets (such as buildings, equipment, inventory and machinery) instead of being invested in passive income generating assets.

This strategy helps preserve the corporation’s small business deduction.

Please contact SB Partners to learn more, or to discuss a variety of our signature TOPI Solutions.

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