29 May 2018 STEP Roundtable Q.7, 2018-0744031C6 indicated that the shares of a corporation that did not generate business income (e.g., a corporation that generated rents that, given the level of activity, constituted income from property ) cannot qualify as excluded shares, whereas in Examples 8 and 12 of the Guidance on the Application of the Split Income Rules for Adults (December 13, 2017), shares of a corporation earning income from passive investment assets qualified as excluded shares. How should these positions be reconciled?
CRA noted that if in Q.7 of STEP 2018, if it instead were assumed that the corporation carried on a business, the corporation’s shares could qualify as excluded shares. On the other hand, even if it did not carry on a business, the amount received from the corporation by the specified individual would qualify as an excluded amount if it were not derived, directly or indirectly, from a related business in respect of the individual for the year.
This response is similar to 5 October 2018 APFF Financial Strategies and Instruments Roundtable, Q.2 and 5 October 2018 APFF Roundtable, Q.9(a).