Adm 4344 Term Test 3
Term Test #3 (1 hour)
ADM 4344A – Tax II
March 15, 2011
Prof. Kathryn Pedwell
Student Name:: _______________________________________________________________
Student I.D.: _________________________________________________________________
|Question #1 |/10 |
|Question # 2 |/10 |
|Question # 3 |/20 |
|Total: …show more content…
Your client is already earning over $200,000 per year, paying tax at the maximum federal tax bracket of 29% and provincial tax of 13% and his existing taxes absorb all of his current tax credits. Nonetheless, he wants all of the after-tax income of his corporation paid out to him in the form of dividends.
After some investigation, you determine that his active business income is eligible for the small business deduction of 17% and will incur provincial taxes at a rate of 5%. Provincial dividend tax credits are 7/17 of the dividend gross up for eligible dividends and 1/3 of the dividend gross up for non-eligible dividends.
To understand the impact of incorporating, your client has asked you to calculate two scenarios for him: