Iris Kronemen approaches you with the following information

a) She resides in a province with a 3% personal tax rate where she owns and operates an incorporated business which generates income in the amount of $125,000 before taxes

b) she has federal personal tax credits of $2100 and provincial personal tax credits of $1400 including among others the martial status tax rate

c) She requires $ 65,000 before taxes for living expenses each year

d) She wants to maximize your Canad Pension plan contributions each year.  The CPP calculations are as follows

Pensionable earnings (salary) …………………….$55,900

Basic exemption...…………………………………………(3,500)

                                                                          -------------------------

Maximum contributory earnings...………………..$52,400

                                                                           =================

Employee Rate...…………………………………………..4.95%

Maximum Contribution...……………………………….2,594

e) She wants to make the maximum RRSP contribution based on the earned income you determine she should have. Assume that her earned income for 2017 is the same as for 2018

You have agreed to determine the tax consequences of the salary/dividend combination for Ms. Kronemen that will achieve her goals.

Answer rating: 100% (QA)

We know that Amount generated 125000 Federal personal tax credits 2100 ... View the full answer