Resource Bulletin – Canadian Private Corporation Tax Changes: Finance Clarifies Income Sprinkling

Corporation Taxation Bulletin by Saskatoon lawyer, Joseph A. Gill

On December 13, 2017, the Department of Finance (“Finance”) provided clarifications on its earlier proposed changes concerning income sprinkling. The concept of “income sprinkling” is essentially making arrangements to share the tax burden among related persons. This most commonly takes the form of dividends coming out of a private corporation to various family members; by doing this, the full tax burden of the family is divided up among the various family members. As one can imagine, various forms of “income sprinkling” greatly offended Finance and so new rules were proposed to address this practice. The purpose of this document is to provide an overview of the clarifications which Finance provided to its original proposed changes.

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