Donat Ltd. is a Canadian controlled private corporation (CCPC) that anticipates that its Taxable Income for the taxation year ending December 31, 2018 will be $625,000. All of the Corporation's shares are owned by Martin Donat. The anticipated income figure of $625,000 is after the deduction of a $275,000 salary payment to Martin. He plans to maintain his salary at $275,000 for the next 5 years.

All Donat Ltd. income, both in the current and in previous years, is the result of active business income. However, this is the first year that its Taxable Income has exceeded the annual business limit for the small business deduction. It has no balance in its GRIP account at the beginning of 2018.

Martin has read an article written by a financial expert which states that when the Taxable Income of a CCPC exceeds $500, 000 you must "bonus down" to prevent double taxation. He does not need any additional funds for his personal living costs currently, but plans to build his dream home in 2022. That year, he will require substantial cash for the homes construction. In Martin 's province of residence, assume:

for 2018 that provincial corporate tax rates are 13 percent on active business income in excess of the small business deduction and 2.5 percent on active business income eligible for the small business deduction.

for 2018 to 2022 any Taxable Income in excess of Martin's $275,000 salary will be taxed at 33 percent federally and 19 percent provincially.

for 2022 the dividend gross up will be 38 percent for eligible dividends and 17 percent for non-eligible dividends.

for 2022 the federal dividend tax credit will be 6/11 of the gross up for eligible dividends and 21/29 of the gross up for non-eligible dividends.

for 2022 the provincial dividend tax credit will be 36 percent of the gross up for eligible dividends and 20 percent of the gross up for non-eligible dividends.

Required: As Martin's tax consultant, would you advise him to bonus down by paying himself additional salary of $125,000 in 2018? Justify your conclusion.