Corporation On April 1, 2020, a corporation with a December 31 taxation year purchased a three-year investment
Question:
Corporation On April 1, 2020, a corporation with a December 31 taxation year purchased a three-year investment certificate for $20,000. The certificate pays interest only at the end of the three-year term but interest is compounded annually at the rate of 7%. Currently, the corporation’s marginal tax rate is 28%. However, in 2021, the marginal tax rate will decrease to 20%.
Part 2 Individual An individual makes the identical investment on April 1, 2020. The individual’s marginal tax rate in 2020 is also 28% and is expected to decrease to 20% in 2021.
Required: Complete the table below to show the interest income and the tax liability each year for the corporation and the individual
Canadian Income Taxation 2022/2023
ISBN: 9781260881202
25th Edition
Authors: William Buckwold, Joan Kitunen, Matthew Roman