Client story

You are an accounting student and your dads friend knows this and comes to you with a problem he is having and wants your advice. He runs his own company as well as a side job, and his wife works full time as well. He wants to know exactly how to pay the least amount of taxes as he possibly can. He need your to figure out for him what he should do to reduce his taxes, but keep as much money as he possibly can. Here is his information:

	Friend	Wife
Business income	$140,000	0
Employment income	$9000	$69000
Cash left in company	$30,000	0
Donations	$500	0
Personal Taxes paid to date	$16,400	$20,700
Personal portion of CPP paid	$2898	$4478
Corporate taxes paid to date	$4800	0

Your problem is to figure out is what is the best way to get $130,000 out of his small CCPC company by either paying non eligible dividends, or wages or a combination of the two? If you want him to do a donation, or RRSP you must use the cash left in the company amount to do this. (Remember, you need to then add this to the $130,000 cash already taken out.) You can suggest RRSP, donations or another alternative. Remember, he wants to keep as much cash as he can, and he only has $30,000 of extra cash left above his spending to pay personal taxes, RRSP, donations or anything else you suggest.

Please show your analysis by either printing off the Profile Tax Summary or doing up an excel template for each option you choose. Please also write a summary of your analysis to me and why you suggest your solution to the above problem. Remember this is your dads best friend and you really want to impress him and your dad!