Duhaime's Law Dictionary


Kiddie Tax Definition:

A tax imposed on minors in the events of income from specified high yield sources.

In the 2011 decision of Madam Justice Valorie Miller of the Tax Court of Canada, Jeannotte v. The Queen, these words:

"§120.4 was added to the Income Tax Act (the “Act”) in 2000 and is applicable to the 2000 and subsequent taxation years. The purpose of §120.4 was to prevent high-income individuals from being able to reduce their taxes by income splitting with their minor children. The tax levied by this section is more commonly referred to as the kiddie tax."

Professor Krishna of Ottawa University, faculty of law, writes, in his 2012 book, Income Tax Law:

"The kidie tax is  a special flat tax that applies at the highest rate to certain forms of passive income of individuals under the age of 18.

"The tax appkies to taxable duividends ... and income from a partnership or trust....

"The kiddie tax does not apply to income  (or) reasonable remuneration to minors."

REFERENCES:

  • Jeannotte v. The Queen, 2011 TCC 247
  • Krishna, Vern, Income Tax Law (Toronto: Irwin Law, 2012), pages 114-115)

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