Shirley wants to decide whether it makes sense for her to invest her money personally or via a corporation. She has the following income Interest income $5,000

Required:

Using the Rates below, indicate to Shirley

1. a) How much taxes she would pay personally

2. b) How much taxes she would pay if the income flowed through the corporation

3. c) Determine if there is a tax cost or tax savings if she invested personally versus in the

   corporation, and how much

4. d) Determine if there is a prepayment or a deferral of taxes when the corporation is used,

   and how much

Show all your working.

Rates

	Interest	Capital Gain	Non-eligible dividends	Eligible dividends
Dividend Gross up			15%	38%
Personal tax rate	50%	50%	50%	50%
Part 1 Tax	40%	40%	40%	40%
ART	10.67%	10.67%	10.67%	10.67%
Dividend Refund on investment income	30.67%	30.67%	30.67%	30.67%
Part IV tax	38.33%	38.33%	38.33%	38.33%

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