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
b) How much taxes she would pay if the income flowed through the corporation
c) Determine if there is a tax cost or tax savings if she invested personally versus in the
corporation, and how much
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%
.
Answer & Explanation
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