Appropriate income splitting strategies for taxation purposes may include:

Question

Quizplus · Accepted Answer

Income splitting strategies typically aim to distribute income in a way that minimizes overall tax liability. A) is incorrect because personal services income (PSI) rules generally prevent income earned from personal effort being attributed to another person for tax purposes. B) is incorrect as transferring unearned income to a minor is subject to specific tax rules that often tax such income at a higher rate, making it an ineffective strategy. C) is incorrect because transferring income from a lower tax rate to a higher tax rate would increase the tax liability, contrary to the goal of income splitting strategies.

Appropriate Income Splitting Strategies for Taxation Purposes May Include