Question:

BASED ON THE INFORMATION BELOW, I NEED INFORMATION TO DIRECT TOWARDS WHETHER MICHELE CAN SAVE OR DEFER INCOME TAX BY INCORPORATING HER BUSINESS.

Michelle James has been referred to you by a banker in your business network. Michelle wants your advice as to whether she should incorporate her investment income from the sources noted below into a holding corporation of which she would be the sole shareholder and employee.

In 2016 Michelle, a resident of Ontario, received the following income:

Interest income on a term deposit investment $ 10,000

Dividend from a public corporation - $ 20,000

Capital gain from the sale of public company shares $ 20,000

Dividend from Mobile Personnel Inc. ("Mobile"), $ 25,000

a CPPC in which she own a 45% common share interest

Mobile is owned 55% by Michelle's best friend, Jane, who also lives in Ontario. All of Mobile's income is eligible for the small business deduction. Mobile did not receive a dividend refund

when it paid the above dividend in 2016. Mobile operates a permanent and casual staff personnel business.

Michelle operates an unincorporated retail jewellery store business. The business started five years ago and the estimated 2016 taxable retail business income is $200,000. Michelle also wants your opinion on whether this business should be incorporated.

In your analysis, the following combined (federal and provincial) income tax rates for 2016 should be assumed:

Corporate income tax rates

On business income eligible for small business deduction 15 %

On business income not eligible for small business deduction 29 %

On specified investment business income -before dividends paid 53 %

On specified investment business income - after dividends paid 18 %

Capital gains - taxable portion treated as income from a SIB above 53 %

Capital gains - untaxed portion 0 %

Personal tax rates

Top marginal tax rate 53 %

Effective tax rate of LRIP dividends 42 %

Effective tax rate on GRIP dividends 31 %

2.I have project as attached file , can you please help me .

Thank you

download the attachments

GeneralProducts Inc is incorporated in Nevada, USA on Jan 1,2013 to takeover a local retail chain. The objective of the compan suuply goods of every day use to customers at the most competitive prices. GeneralProducts has chain of stores throughout USA. The retial operations of the company are so designed that customers can shop seamlessly in stores and online. objective of the company is to of stores throughout es and online