Shirley wants to decide whether it makes sense for her to invest her money personally...
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Accounting
Shirley wants to decide whether it makes sense for her to invest her money personally or via a corporation. She has the following income Interest income $5,000
Required:
Using the Rates below, indicate to Shirley
-
a) How much taxes she would pay personally
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b) How much taxes she would pay if the income flowed through the corporation
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c) Determine if there is a tax cost or tax savings if she invested personally versus in the
corporation, and how much
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d) Determine if there is a prepayment or a deferral of taxes when the corporation is used,
and how much
Show all your working.
Rates
| Interest | Capital Gain | Non-eligible dividends | Eligible dividends | |
| Dividend Gross up | 15% | 38% | ||
| Personal tax rate | 50% | 50% | 50% | 50% |
| Part 1 Tax | 40% | 40% | 40% | 40% |
| ART | 10.67% | 10.67% | 10.67% | 10.67% |
| Dividend Refund on investment income | 30.67% | 30.67% | 30.67% | 30.67% |
| Part IV tax | 38.33% | 38.33% | 38.33% | 38.33% |
.
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