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Is it still possible to reap the benefits of income sown by another? SETU KAMAL explains the current situation
KEY POINTS
- The effect of the 50% additional income tax rate.
- The benefits of income splitting.
- A summary of the legal barriers.
- Income splitting married couples and civil partners.
- Deciding whether there is a settlement.
Perhaps we should start with a biblical quote to set the scene:
‘And he who reaps receives wages and gathers fruit for eternal life that both he who sows and he who reaps may rejoice together. For in this the saying is true: “One sows and another reaps”’ (John 4:36).
The new higher rate burden
The introduction of an additional rate of tax and reduced personal allowances from 2010/11 will further increase the income tax burden of the higher rate taxpayer and much has been written on the desirability of the capitalisation...
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