Monday’s= Small Business
Income splitting rules are changing in 2018. One of the new criteria we are going to be dealing with is additional tax on dividends paid to family members. There are a few “get out of jail free” provisions.
One of these provisions is that the new tax splitting rules will not apply to any family member who has been active in the business for five years. These five years do not have to be consecutive and they do not have to be right now. The shareholder has to have worked at least 20 hours a week for each week the business was operating, in order for that year to qualify as one where the shareholder was active in the business.
Before 2018 gets here you can figure out if you have shareholders who have five or more years of working full time in the business.
This is not the only rule you are going to have to worry about, but it is one where you can do the research now and possibly save some tax in the future.
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