Tax On Split Income (TOSI) Calculator

A dividend to an adult child who never worked a day in the business gets taxed at the very top rate, no matter how little other income they have.

Reading This Tool

How To Use This Calculator

Enter the dividend amount, the family member's age, and their actual involvement in the business.

The most commonly used exclusions are the excluded business test, averaging at least 20 hours a week in the business, currently or in any five prior years, and the excluded shares test for family members 25 or older holding a meaningful, non-service-business stake.

Your Inputs

Dividend Amount To The Family Member $40,000

Family Member's Age 30

Average Hours Per Week In The Business 15

Do The Shares Meet The Excluded Shares Test?

Top Marginal Tax Rate (If TOSI Applies) 53.0%

Family Member's Own Marginal Rate (If TOSI Doesn't Apply) 20.0%

The 20-hour excluded business test can be met in the current year or any five prior years, not necessarily consecutive, which matters for a family member who worked heavily in the business years ago but has since stepped back.

TOSI Determination

Tax On This Dividend

Effective Rate Applied

0.0%

Cost Of TOSI Applying, If It Does

Tax At Own Marginal Rate vs. TOSI Top Rate

This models the two most commonly relied-upon exclusions only. Other exclusions exist for reasonable returns to those 18 to 24, capital gains on qualified small business shares, and income derived from a deceased spouse's contribution, none modeled here. TOSI determinations are fact-specific, get this confirmed before relying on it.

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