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Tip 9 – 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 9

Shares of a corporation can be converted into other instruments which are not governed by the TOSI rules. With proper planning, non-active family members can subscribe for equity shares of your operating company, and start receiving dividends once their equity shares have a 10% voting right and are equal to 10% of the value of your operating company.

Generally speaking, this strategy will not work for professional corporations or corporations whose income is 90% or more derived from the provision of services.

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

Tax on Passive Income | Tip 9

Looking for ways to reduce income subject to the TOPI rules? It might be beneficial to consider donating funds or investments with accrued capital gains.

The donations are deductible by the corporation to the extent there is taxable income (excluding income subject to TOPI rules).

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

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