AIT805 Integration & Dividends Example

AIT805 Integration & Dividends Example - CCPC Non...

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Integration Effective 2006 and after. Ineligible Dividends U 25% Gross-up 2/3 +1/3 DTC CCPC U Income $100 Dividend $80 Tax(20%) 20 GU 25% 20 After Tx $ 80 Taxable $100 Tax: Fed 12% Tax 43% 43 Prov 8 DTC 20 (2/3 + 1/3) 20 % Tax 23 Eligible Dividends 45% Gross-up 11/18 + 7/8 DTC PUBLIC Co . U Income $100 Dividend $68 Tax(32%) 32 GU 45% 32 After Tx $ 68 Taxable $100 Tax: Fed % Tax 43% 43 Prov DTC 32 (11/18 + 7/8) 32 % Tax 11 CCPC has a GRIP account and can pay Eligible Dividends as long as it has a balance in the GRIP account (non-eligible for SBD on ABI and taxed at the lower tax rate.) Non-CCPC (Public) company has a LRIP account and has to pay Ineligible Dividends as long as it has a balance in the LRIP account before any eligible dividends are paid.
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Unformatted text preview: CCPC Non- CCPC U U o This company may have been a CCPC and subject to the lower tax rate and has a balance of LRIP amounts. Example: CCPC has a GRIP account and it is calculated as follows: 68% of [$500,000 - $400,000] = $68,000 (using the effective tax rate of 32%) • 68% equals to the after-tax amounts eligible for distributions as a dividend. • Qualify as Eligible dividends, and subject to 45% GU and 11/18 + 7/18 DTC. • CCPC can pay out an Eligible dividend as long as it has a GRIP balance at the end of the year. Tax Rate : CCPC (all income eligible for SBD) 38-10 +1.12 (4% of 28%)-16 13.12 +8 (prov.) 21.12 Non-CCPC (Public Cos.) 38-10 +1.12 (4% of 28%)- 7 22.12 +10 (prov) 32.12...
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AIT805 Integration & Dividends Example - CCPC Non...

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