Patrick Innes has a business that he estimates will produce income of $130,000 per year If he incorporates this business in 2020, all of the income wouldbe eligible for the small business deduction and all dividends paid would be non-eligible. In the province where he lives, such corporate income is taxed ata combined federal/provincial rate of 14 percent. Mr. Innes has other income sources that place him in a combined federal/provincial tax bracket of 42percent In his province, the provincial dividend tax credit for non-eligible dividends is equal to 20 percent of the gross upAnswer the following: Round to the nearest dollar, use 1.000s commas and do NOT include .00s ora dollar sign. Enter all numbers as positive.1. How much income is available to be distributed or paid as a cash dividend after corporate taxes?2. How much is the grossed up dividend Mr. Innes would have if the corporation distributed all after tax income to him as a dividend?3. How much is the dividend tax credit dollar amount (combined federal and provincial)?4. Compare the after tax retention between corporation and Mr. Innes. Should he incorporate based on after tax returns? Answer Yes or No.

Mr. Patrick Innes has two taxation options with respect to the earned income. a) Income earned is…

Patrick Innes has a business that he estimates will produce income of $130,000 per year. If he incorporates this bu be eligible for the small business deduction and all dividends paid would be non-eligible. In the province where he a combined federal/provincial rate of 14 percent. Mr. Innes has other inconme sources that place him in a combined percent In his province, the provincial dividend tax credit for non-eligible dividends is equal to 20 percent of the grc

Patrick Innes has a business that he estimates will produce income of $130,000 per year. If he incorporates this bu be eligible for the small business deduction and all dividends paid would be non-eligible. In the province where he a combined federal/provincial rate of 14 percent. Mr. Innes has other inconme sources that place him in a combined percent In his province, the provincial dividend tax credit for non-eligible dividends is equal to 20 percent of the grc

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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H5.