CRA provides little direction on new small-business tax regime
Source: Investment Executive
Canada Revenue Agency officials provided tax experts with little relief from difficulties they may be experiencing in interpreting complex new legislation governing the taxation of income paid from a small business during a roundtable discussion at the annual national conference of the Canadian arm of the Society of Trust and Estate Practitioners (STEP Canada) in Toronto last week.
Indeed, Phil Kohnen, manager of the trusts section in the CRA’s income tax rulings directorate, acknowledged during the discussion that he was not in a position to give “clear and definite directions” to specific questions from panellists relating to the new tax on split income [TOSI] rules, which became effective Jan. 1. However, Kohnen did suggest that certain exclusions provided in the legislation that would allow small-business owners to split income should be considered “bright line” tests and that taxpayers would be better off relying first on the “reasonable return” exclusion to determine whether income paid out of the small business would fall under the TOSI rules.