PROBLEM $2(15$ marks$)$

Estimated time $30$ minutes

Ms$.$ Lewis has $$200,000$ in cash that she does not currendy require for personal expenses. In her province of residesce, the provincial income tax rate oe irvestment income and active business income carned by a CCPC is $13\%$ and $9\%,$ respectively.

At the personal level, Ms$.$ Lewis has employment income of over $$175,000.$ This means that her marginal federal income tax rate is $29\%$ and her murginal provincial income tax rate is $14\%.$ The provincial dividend tax crodit on eligible dividends is equal to $35\%$ of the gross up$.$

It is Ms$.$ Lewis's intent to invest her $$200,000$ oe January $1,2024,$ in peeferred shares of a widely traded public company. The company pays antual eligible dividends of $4\%.$ Ms$.$ Lewis's only investment income for the year will be the $$8\mathrm{.}000$ of eligille dividends that she receives on these shares.

Required: Showing all work, prepare calculations that will compare the after$-$tax retention of income to Ms$.$ Lewis for $2024$ if:

a$.$ The investment in the preferred shares is pervonally owned by hims.

b$.$ The share investrsent is owned by a CCPC is which she is the sole shareholder and which distributes all after$-$tax income as elighle dividends.