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Tax Attribution Rules

Income Splitting

To prevent the arbitrary splitting of income between individuals who do not deal at arm's length, the Income Tax Act includes attribution rules. These rules basically attribute back to the transferor any income earned on property which is transferred to a non-arm's length person.

Attribution will also apply to certain transfers and loans made to a corporation, other than a small business corporation. Usually, where the estate planning objectives are other than income splitting among family members, can be structured to avoid the existing corporate attribution rules.

Where attribution does not apply, a special income-splitting tax applies to certain types of income received by minor children, including: