Canadian Centre for Policy Alternatives Report de-bunks myths on income sprinkling
There are a lot of myths about the government’s policy proposals. Some of them concern so-called “income sprinkling”, that is corporations giving income to family members who do not really work for the corporation. According to a new study by the Canadian Centre for Policy Alternatives:
“Nearly all of the families who benefit most from income sprinkling are headed by male income earners, which undercuts claims that the current loophole is positive for gender equality, and almost half of all benefits flow to the richest 5% of families—those earning more than $216,000 a year. Families headed by professionals, particularly physicians, lawyers, accountants and those in real estate and insurance, are most likely to benefit from the income-sprinkling loophole.
On the other hand, more traditional small businesses, such as family-run farms or restaurants, are 2.5 times less likely than professionals to benefit from income sprinkling. Even among health care businesses—the group most likely to benefit from the current sprinkling loophole —three-quarters of families see little or no tax gain from distributing dividends among family members.”
The vast majority of Canadians who benefit from income sprinkling are well to do. Let’s have a fairer tax system for all of us.