Do income attribution rules affect transferring family business shares to my children in Ontario?

Potentially, yes, and this is a federal income tax question rather than an Ontario law question, since it falls under the federal Income Tax Act rather than provincial law. In general terms, Canada's tax rules include income-attribution provisions designed to limit income splitting — situations where a parent gives or lends property, including business shares, to a minor child or a spouse, and income or gains that would otherwise be taxed at the parent's rate get reported at the child's, presumably lower, rate instead. Depending on how a share transfer is structured, these rules can attribute income or capital gains from the transferred shares back to the parent rather than the child.

The rules are detailed, apply differently depending on the child's age and the type of income involved, and interact with how the transfer itself is structured, such as a sale versus a gift, and with other planning tools like estate freezes and family trusts. Because getting this wrong can mean an unexpected tax bill lands on the parent instead of the child, this is squarely a matter for an accountant or tax lawyer to review before shares are transferred, not something to work out from general principles alone.