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Excel File Edit ViewInsert Format Tools Data Window Acct375 Final 2020W.pdf Home Tools Acct375_Final_20... * Sign Question 1- Salary v. Dividends (8 marks) Several years

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Excel File Edit ViewInsert Format Tools Data Window Acct375 Final 2020W.pdf Home Tools Acct375_Final_20... * Sign Question 1- Salary v. Dividends (8 marks) Several years ago, Chun Li established an unincorporated business that she anticipates will have active business income of $153.000 during the coming year Chun Li has asked your advice as to whether she should incorporate this business from a tax perspective Chun Li anticipates that she would take out asalary of $75,000 (as this amount is needed for living expenses) and the remainder would remain in the corporation and paid out as dividends if needed Chun-u has employment income in excess of $250,000 per year. Because of this, any additional income that she cams will be subject to a combined federal provincial tax rate The provincial Corporate tax rate is 3% on income that is eligible for the small business dediction and 11% on other income. In her province of residence, the dividend tax credit is equal to 1/3 of the dividend gross up for all dividends Required A Compute the after-tax cash retained in 2019 on the $153.000 eamed personally and that would be read the business was incorporated and Chun-u took out a salary of 575.000 and the remainder as dividends B Compare the total after tax cash retained by using a corporation compared to when the income is earned directly by Chun determine the income tax cost or savings to Chun- the bu s incorporated C Advise Chun-ul with respect to any tax deferral that will be available on income te the dividends) left in the corporation after paying the salary Excel File Edit ViewInsert Format Tools Data Window Acct375 Final 2020W.pdf Home Tools Acct375_Final_20... * Sign Question 1- Salary v. Dividends (8 marks) Several years ago, Chun Li established an unincorporated business that she anticipates will have active business income of $153.000 during the coming year Chun Li has asked your advice as to whether she should incorporate this business from a tax perspective Chun Li anticipates that she would take out asalary of $75,000 (as this amount is needed for living expenses) and the remainder would remain in the corporation and paid out as dividends if needed Chun-u has employment income in excess of $250,000 per year. Because of this, any additional income that she cams will be subject to a combined federal provincial tax rate The provincial Corporate tax rate is 3% on income that is eligible for the small business dediction and 11% on other income. In her province of residence, the dividend tax credit is equal to 1/3 of the dividend gross up for all dividends Required A Compute the after-tax cash retained in 2019 on the $153.000 eamed personally and that would be read the business was incorporated and Chun-u took out a salary of 575.000 and the remainder as dividends B Compare the total after tax cash retained by using a corporation compared to when the income is earned directly by Chun determine the income tax cost or savings to Chun- the bu s incorporated C Advise Chun-ul with respect to any tax deferral that will be available on income te the dividends) left in the corporation after paying the salary

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