Mrs. Stark has $200,000 in cash that she does not currently require for personal expenses. In...
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Mrs. Stark has $200,000 in cash that she does not currently require for personal expenses. In her province of residence, the combined federal/provincial income tax rate on investment income earned by a CCPC is 51-2/3%. A. B. At the personal level, Mrs. Stark has employment income in excess of $175,000. This means that her marginal income tax rate on additional income is 29% federally and 14% provincially. The provincial dividend tax credit on non-eligible dividends is equal to 30% of the gross up and 45% on eligible dividends. It is Mrs. Stark's intent to invest her $200,000 in a guaranteed investment certificate (GIC) that will pay annual interest of 4% for the 2021 taxation year. Mrs. Stark's only investment income will be the $8,000 of interest that she will receive on the GIC. Required: Prepare calculations that will compare the after-tax retention of income that will accrue to Mrs. Stark for 2021 if: She continues to own the GIC. She incorporates the GIC in a CCPC in which she will be the sole shareholder and which pays out all available after-tax income as non-eligible dividends. Mrs. Stark has $200,000 in cash that she does not currently require for personal expenses. In her province of residence, the combined federal/provincial income tax rate on investment income earned by a CCPC is 51-2/3%. A. B. At the personal level, Mrs. Stark has employment income in excess of $175,000. This means that her marginal income tax rate on additional income is 29% federally and 14% provincially. The provincial dividend tax credit on non-eligible dividends is equal to 30% of the gross up and 45% on eligible dividends. It is Mrs. Stark's intent to invest her $200,000 in a guaranteed investment certificate (GIC) that will pay annual interest of 4% for the 2021 taxation year. Mrs. Stark's only investment income will be the $8,000 of interest that she will receive on the GIC. Required: Prepare calculations that will compare the after-tax retention of income that will accrue to Mrs. Stark for 2021 if: She continues to own the GIC. She incorporates the GIC in a CCPC in which she will be the sole shareholder and which pays out all available after-tax income as non-eligible dividends.
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To calculate the aftertax retention of income for Mrs Stark well need to consider the tax implicatio... View the full answer
Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
Posted Date:
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