Murphy McNully earns business income of $100,000 every year. His combined personal tax rate is 40%....

 

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Murphy McNully earns business income of $100,000 every year. His combined personal tax rate is 40%. If he incorporates his business, it will be subject to a 14% corporate tax rate and any dividends paid to him would be non-eligible. His provincial dividend tax credit would be 4/13 of the gross-up. Therefore, if he incorporates and pays all after-tax income to himself in the form of dividends, how much will Murphy be able to claim as dividend tax credits on his personal tax return? Do not include "$" or commas in your answer (numbers only). ANSWER: Murphy McNully earns business income of $100,000 every year. His combined personal tax rate is 40%. If he incorporates his business, it will be subject to a 14% corporate tax rate and any dividends paid to him would be non-eligible. His provincial dividend tax credit would be 4/13 of the gross-up. Therefore, if he incorporates and pays all after-tax income to himself in the form of dividends, how much will Murphy be able to claim as dividend tax credits on his personal tax return? Do not include "$" or commas in your answer (numbers only). ANSWER:

Answer rating: 100% (QA)

To calculate Murphys dividend tax credits we first need to determine the grossedu... View the full answer