The proposed tax changes are limiting the opportunities to income split. Spousal couples that have one person making significantly less money can still take advantage of spousal Loans.  As long as the loan is setup properly tax advantages to the overall tax bill can be significant. Investment income from the money will be taxed at the lower tax rate as long as the following conditions are adhered to.

The loan is properly documented with repayment terms including an interest rate of at least 1%.

The spouse receiving the loan must pay the interest by January 30 each year or the tax saving benefit will be lost.  Only the interest must be paid there is no requirement to repay the principle.

The lending spouse must report the income earned from the interest and the receiving spouse can claim the interest paid on the loan as long as the money was used to purchase income producing assets that can create passive income in a non-registered account.

For more information, feel free to contact us at This email address is being protected from spambots. You need JavaScript enabled to view it.