Mrs$.$ Edwards, age $49,$ is the owner$-$manager of a successful retail corporation. After paying a salary of $$220,000$ to herself, her corporation is earning $$600,000.$ In addition to her salary, she is contemplating withdrawing additional funds. She is deciding between two options:

$1)$ Paying a bonus of $$100,000$ to herself

$2)$ Paying a dividend to herself.

Mrs$.$ Edwards resides in a province where the corporate tax rate is $4\%$ for income eligible for the SBD$,$ and $12\%$ for other income. Assume all of the corporation$$s income is Canadian active business income, and the corporation$$s SBD limit is $$500,000.$

REQUIRED

a$)$ Determine how much dividends her corporation should pay that would leave the corporation with the same amount of cash as paying $$100,000$ of bonuses.

b$)$ Conduct a bonus vs$.$ dividends analysis to determine which option would leave her with more after$-$tax funds personally. Assume Mrs$.$ Edwards$$ combined marginal tax rate is $50\%($the top marginal rate$),$ and that the dividend tax credit is equal to the gross$-$up$.$ You do not need to separate federal and provincial tax calculations.

c$)$ If Mrs$.$ Edwards simply retained the $$100,000$ in the company instead of paying it out, how much tax would she defer on this income? Use the better of the two options $($determined in part b$)$ for this analysis.