Question

Mary Song, a Toronto investor, receives $10,000 in dividends from B.C. Forest Products shares, $10,000 in interest from a deposit in a chartered bank, and a $10,000 capital gain from selling Central B.C. Mines shares. Use the information in Table 1A.2 to calculate the after-tax cash flow from each investment.
Interest Tax Treatment
Interest ........................ $1,000.00
Federal tax at 29% .................. 290.00
Provincial tax at 13.16% ................. 131.60
Total tax ...................... $ 421.60
Capital Gains Tax Treatment
Capital gains .................... $1,000.00
Taxable capital gains (50% × $1,000) ........... 500.00
Federal tax at 29% .................... 145.00
Provincial tax at 13.16% ................ 65.80
Total tax ....................... $ 210.80
Dividend Tax Treatment (Eligible Dividends)
Dividends ....................... $1,000.00
Gross up at 38% ................... 380.00
Grossed-up dividend ................. 1380.00
Federal tax at 29% .................. 400.20
Less dividend tax credit (15.0198% × $1,380)* ........ 207.27
Federal tax payable ................. $ 192.93
Provincial tax at 13.16% (13.16% × $1,380) ....... $ 181.61
Less dividend tax credit (6.4% × $1,380)* ......... 88.32
Provincial tax payable ................. $ 93.29
Total tax ..................... $ 286.22


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  • CreatedJune 17, 2015
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