GMR Inc is a CCPC owned 100% by Ms. Rothstein. For the current year, the company accountant is predicting that taxable income will exceed $500,000. The accountant has suggested that Ms. Rothstein should consider having the company pay her additional salary to ensure the taxable income of the CCPC will be less than $500,000. Why? CLEE OA. Because the CRA will never challenge the reasonableness of remuneration to a shareholder, and the accountant must feel that Ms. Rothstein deserves a bonus this year. OB. Because the case for "bonusing down" has gotten stronger in the past few years, and it is therefore more important than ever to take advantage of this possibility to save income tax. OC. Because only income eligible for the SBD benefits from modest tax deferral and significant tax savings. OD. Because if the income over $500,000 remains in the company it will not benefit from the SBD, and therefore after tax retention on this excess income in the company will be lower than it would be on paying a salary to Ms. Rothstein.
GMR Inc is a CCPC owned 100% by Ms. Rothstein. For the current year, the company accountant is predicting that taxable income will exceed $500,000. The accountant has suggested that Ms. Rothstein should consider having the company pay her additional salary to ensure the taxable income of the CCPC will be less than $500,000. Why? CLEE OA. Because the CRA will never challenge the reasonableness of remuneration to a shareholder, and the accountant must feel that Ms. Rothstein deserves a bonus this year. OB. Because the case for "bonusing down" has gotten stronger in the past few years, and it is therefore more important than ever to take advantage of this possibility to save income tax. OC. Because only income eligible for the SBD benefits from modest tax deferral and significant tax savings. OD. Because if the income over $500,000 remains in the company it will not benefit from the SBD, and therefore after tax retention on this excess income in the company will be lower than it would be on paying a salary to Ms. Rothstein.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Munabhai
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GMR Inc is a CCPC owned 100% by Ms. Rothstein. For the current year, the company accountant is predicting that taxable income will exceed $500,000. The accountant has suggested that Ms.
Rothstein should consider having the company pay her additional salary to ensure the taxable income of the CCPC will be less than $500,000. Why?
(...
OA. Because the CRA will never challenge the reasonableness of remuneration to a shareholder, and the accountant must feel that Ms. Rothstein deserves a bonus this year.
B. Because the case for "bonusing down" has gotten stronger in the past few years, and it is therefore more important than ever to take advantage of this possibility to save income tax.
OC. Because only income eligible for the SBD benefits from a modest tax deferral and significant tax savings.
D. Because if the income over $500,000 remains in the company it will not benefit from the SBD, and therefore after tax retention on this excess income in the company will be lower than it
would be on paying a salary to Ms. Rothstein.
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