TOSI and rental income

Mr X owns the voting shares of Holdco that owns a rental property. His two kids own non-voting shares that on which Holdco pays dividends. Does the TOSI apply to dividends paid to the kids?

Is the rental operation a “business”? The law is unclear on what constitutes a business. A low level of activity might entail a finding that Holdco carried on a business, which would engage the TOSI rules. See Canadian Marconi v R, 1986 CanLII 42 (SCC), Ollenberger v R, 2013 FCA 74 and Spire Freezers Ltd. v R, 2001 SCC 11.

Balaji Katlai, “TOSI and Dividends from Rental Income: New Rules, Old Problems” Tax for the Owner Manager 19:3 (July 2019)

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