Five years have passed since your initial meeting with Jasmine. She decided to operate her bakery business as a corporation, called Sweet Treats Inc. The business has been more successful than Jasmine could have ever imagined. The following information is available for Sweet Treats Inc.: a. Profits have been steadily increasing. In the most recent tax year, the company reported approximately $250,000 of taxable income (consisting solely of active business income). The corporation claims the small business deduction every year on its corporate tax return. b. Jasmine owns 60% of the Class A voting common shares. Michael Potter (Jasmines brother-in-law) owns 30% and Eric, her spouse, owns the remaining 10%. c. Michael provided the company with $500,000 in the form of a loan with a nominal interest rate of 1%. The company pays Michael the interest each year. d. The company has four employees that assist Jasmine with the baking and store front. Eric and Michael assist with the bookkeeping and legal and administrative operations for the bakery. e. For the last three years, Jasmine has withdrawn a salary of $50,000. To date, neither Eric nor Michael have withdrawn amounts from the company (other than the interest Michael receives). However, Eric has dedicated more time to the bakery and has cut back on his legal work. Now that the company is in a stable, profitable position, Michael would like to receive returns on his investment. f. Jasmine has been receiving requests from grocery stores to supply them with pre-packaged product, however, due to the limited size of the current facility, Jasmine does not have capacity to do this. As such, Jasmine and Michael are considering purchasing a larger building for the bakery. Currently, Sweet Treats Inc. operates out of a leased building that includes a small commercial kitchen and store front. For legal liability purposes, Michael thinks the building should be purchased by a separate corporation, jointly owned by Michael and Jasmine. Jasmine has prepared a budget and estimates that income after this expansion will grow to $600,000 within two years. She and Eric have discussed the possibility of Eric working for the company full-time, if the expansion proves successful. Based on the above information, prepare a memo for Jasmine answering the following questions: i. Sweet Treats Inc. earns a significant amount of active business income each year with expectations that it will increase substantially in the next few years. Provide Jasmine with some tax planning advice with regard to the active business income earned by Sweet Treats Inc. each year. Be sure to include tax planning advice related to Jasmine and Michaels idea to purchase a new building for the business in a separate corporation and how this might impact active business income and claiming the small business deduction for Sweet Treats Inc. ii. Currently, Jasmine receives a salary from the corporation and Michael and Eric receive no remuneration from the corporation. Provide Jasmine, Eric and Michael with an analysis of the general considerations, advantages and disadvantages of salary versus dividend remuneration and provide a recommendation to them taking their situations into account.