Garth Garson, your client, is a successful business owner. Garth is the sole shareholder of Never Give Up Inc. ("NGU"), a Canadian corporation. NGU earns $500,000 of business income each year that qualifies for the small business deduction. Garth has plans to acquire new businesses and make other investments.

NGU has recently acquired 100% of the shares of Chain Inc. ("Chain"), a taxable Canadian corporation, from a third-party seller. Chain has a minority shareholding in Pajaro Inc. ("Pajaro"), representing 9% of votes and 18% of value in Pajaro.

NGU has generated significant excess cash from its business operations that Garth would like the corporation to invest in a marketable securities portfolio comprised of shares of various dividend-paying U.S. public corporations. Garth would like to understand the tax treatment of the following items:

a)NGU will pay 15% U.S. dividend withholding tax on dividends from the portfolio. What is the treatment of the U.S. dividend withholding tax in calculating taxes payable in Canada? Explain the rationale. [2 marks]

b)Garth plans to trade NGU's marketable securities portfolio on an ongoing basis from time to time to generate some gains. Garth enjoys reading daily business news and researching equity markets to pick the best-performing stocks for this portfolio. That being said, Garth does not have any specialized knowledge in trading securities, although he indicated that he is thinking of enrolling into several technical analysis courses taught by popular TikTok influencers so that he can learn how to become a better trader. Garth is curious to know how the trading income from the portfolio will be characterized for tax purposes and what factors and considerations are relevant to this determination. [4 marks]