T1 Guide: Line 40424 - Federal tax on split income

Entering this Amount (from Forms):

Entering federal tax on split income

In addition to applying to certain types of income of a child born in 2006 or later, tax on split income (TOSI) may now also apply to amounts received by adult individuals from a related business. Where TOSI applies, the disability tax credit can now be used to reduce the individual’s tax payable for the year. However, income that is subject to TOSI must now be added to the individual’s net income for the purpose of calculating various deductions, credits and benefits.

  1. Report the child's income on the appropriate lines of his or her return.
  2. Complete Form T1206. To find this form, use Form Lookup and enter the keyword 1206.

The amount from Part 1 is transferred to line 40424 of the child's Schedule 1. The related deduction is claimed on line 23200 of the T1 General.

Entering this Amount (from Interview):

Entering split income

In addition to applying to certain types of income of a child born in 2006 or later, tax on split income (TOSI) may now also apply to amounts received by adult individuals from a related business. Where TOSI applies, the disability tax credit can now be used to reduce the individual’s tax payable for the year. However, income that is subject to TOSI must now be added to the individual’s net income for the purpose of calculating various deductions, credits and benefits.

  1. Enter your income in the INCOME & EXPENSES section of the interview.
  2. Proceed through the interview until you reach the Other deductions section.
  3. On the Your other deductions profile screen, select Other deductions (legal costs, etc), as well as any other options that apply, and then click Continue.

    You'll be prompted to enter this information on the Tax on split income screen.