Hugh Walker is 30 and single with no dependents. His only source of income is his professional self-employment income. He is thinking of incorporating his public relations firm (Hugh and Cry).1 Using 2021 tax rates, he would like to know how much total net federal tax will be payable in each of the following situations:

Situation 1: do not incorporate; his self-employment professional income will be $110,000.

Situation 2: incorporate; the corporation has taxable income (active business income) of $110,000; he will receive a dividend equal to the maximum after-tax earnings in the corporation.

Situation 3: incorporate; the corporation has taxable income (active business income) before salary of $110,000; he will receive a salary enabling him to generate RRSP contribution room of $12,600 (he has always maxed out his RRSP contributions); the remaining after-tax income in the corporation will be paid to him as a dividend.

For greater certainty, you need to consider both personal and corporate taxes in your solution, where applicable. Show all calculations. [Dont forget CPP & EI considerations]