Patrick Innes has a business that he estimates will produce income of $130,000 per year. If he incorporates this business in 2020, all of the income would be eligible for the small business deduction and all dividends paid would be non-eligible. In the province where he lives, such corporate income is taxed at a combined federal/provincial rate of 14 percent. Mr. Innes has other income sources that place him in a combined federal/provincial tax bracket of 42 percent. In his province, the provincial dividend tax credit for non-eligible dividends is equal to 20 percent of the gross up.

Answer the following:Round to the nearest dollar, use 1,000s commas and do NOT include .00s or a dollar sign. Enter all numbers as positive.

1. How much income is available to be distributed or paid as a cash dividend after corporate taxes?
2. How much is thegrossed up dividendMr. Innes would have if the corporation distributed all after tax income to him as a dividend?
3. How much is thedividend tax creditdollar amount (combined federal and provincial)?
4. Compare the after tax retention between corporation and Mr. Innes. Should he incorporate based on after tax returns? Answer Yes or No.