Paying children (minors – children under the age of 18) a salary and/or dividend is a useful strategy when income splitting. If you would like to pay a salary to the child, the amount paid must be reasonable. “Reasonableness” is determined based on what the typical/normal pay would be to anyone performing a similar duty. Also, to justify a salary, the child must be performing some duty, and the work done must be documented.
On the other hand, dividends paid to minors will be taxed at the highest marginal tax bracket. This will essentially eliminate the advantage of income splitting, which is done to reduce taxes.
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