I believe income splitting and income sprinkling are tax policy issues. There are some very aggressive plans in place with so-called alphabet shares—A, B, C, and D—and one pays dividends to whoever one wants. Whatever is going to secure the best tax result, you pay pay on the A, B, C, or D shares. I think there's a policy issue. The taxation unit in Canada is the individual, not the family unit, but thus far, the government has gone about this in a very ham-handed way.
My personal suggestion for addressing this and addressing 80% of the problem is to extend the existing kiddie tax with no reasonability test to all children up to age 24, and with respect to multiplication of the lifetime capital gains exemption, allow one lifetime capital gains exemption per married couple or common-law partners. I think that's simple, understandable, and addresses 80% of the government's revenue concerns.
I'm opposed to income sprinkling. It's poor tax policy to allow it. I just think there's a much smarter and more sensible way to go about it.