Question
] J.W. Dental - Corporate Investments: Current Market Value: $450,000 Starting Adjusted Cost Base (ACB): $400,000 Current Non-eligible RDTOH Balance:$50,000 Current CDA Balance:$0 All income
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J.W. Dental - Corporate Investments:
Current Market Value: $450,000
Starting Adjusted Cost Base (ACB): $400,000
Current Non-eligible RDTOH Balance:$50,000
Current CDA Balance:$0
All income earned thus far has been taxed at the lower rate so you may assume a GRIP balance of $0
Accumulation Phase (Age 45-65) Annual Return:
Interest:2.0%
Eligible Dividends:1.0%
Foreign Dividends0.5%
Realized Capital Gains:0.5%
Unrealized Capital Gains:1.0%
Total5.0%
Retirement Phase (Age 66-85) Annual Return:
Interest:1.5%
Eligible Dividends:1.0%
Foreign Dividends0.5%
Realized Capital Gains:0.5%
Unrealized Capital Gains:0.5%
Total4.0%
Corporate Earnings Projection:
Age
Year
Corporate Earnings After Tax*
Dividend Paid to Jane
Retained in Corporation
45
2020
$300,000
$145,000
$155,000
46
2021
$310,000
$150,000
$160,000
47
2022
$320,000
$155,000
$165,000
48
2023
$330,000
$160,000
$170,000
49
2024
$345,000
$165,000
$180,000
50
2025
$355,000
$170,000
$185,000
51
2026
$370,000
$180,000
$190,000
52
2027
$380,000
$185,000
$195,000
53
2028
$395,000
$190,000
$205,000
54
2029
$410,000
$200,000
$210,000
55
2030
$425,000
$205,000
$220,000
56
2031
$440,000
$210,000
$230,000
57
2032
$455,000
$220,000
$235,000
58
2033
$470,000
$225,000
$245,000
59
2034
$485,000
$235,000
$250,000
60
2035
$500,000
$240,000
$260,000
61
2036
$520,000
$250,000
$270,000
62
2037
$535,000
$260,000
$275,000
63
2038
$555,000
$270,000
$285,000
64
2039
$575,000
$280,000
$295,000
65
2040
$600,000
$290,000
$310,000
* These are corporate earnings after Part I and IV tax have been paid
Build a complete calculation model of CCPC taxation showing two scenarios:
1.Build the corporate savings account according to the assumptions provided. Jane will begin her retirement and start taking withdrawals from her corporate savings on her 66th birthday. Solve for the annual level withdrawal amount that will deplete the corporate savings account at the end of Jane's age 85.
2.Build the corporate savings account according to the assumptions provided. Jane will begin her retirement and start taking withdrawals from her corporate savings on her 66th birthday. Solve for the annual level withdrawal amount that will leave $5,000,000 in the corporate savings account at the end of Jane's age 85.
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Fundamental Financial Accounting Concepts
Authors: Thomas P. Edmonds, Frances M. Mcnair, Philip R. Olds, Mark Edmonds, Christopher Edmonds
10th Edition
126015940X, 978-1260159400
