Income Splitting #shorts

In Canada and in the United States both are a marginal tax system. It means that as an individual we go from tax rates of 0 all the way up to 50% plus depending on the state or the province you live in we're at about 56 or 57% which is the highest marginal tax rate. And that's if I make over $200,000 a year. Half of that income is taxed and goes back to the government. If we want to income split, two things need to happen. One, our family member needs to be actively involved in the business of more than 20 hours per week. If they're actively involved more than 20 hours per week we can set them up as a shareholder or a beneficiary of a family trust and we can income split through dividends. But that's only if they're actively working more than 20 hours a week. If they're not, we can set them up on payroll and they can earn salary for reasonable pay for reasonable services in exchange.