Seminar.Week 10-April 4,2011 - FMGT 4410 Seminar Questions...

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FMGT 4410 –Seminar Questions Week 10 Week of April 4, 2011 Question 1 TLC Ltd. Is a public company and in 2010, they paid an eligible dividend of $1/share to all of their common shareholders. Calculate the effect on taxes payable of this dividend on the following two shareholders (each of whom owns 10,000 shares of TLC): 1) An individual, who is at the 26% marginal tax bracket 2) FGH Corporation, a Canadian public corporation 1) TLC – Eligible dividend = $1/share Individual Corporation Dividend $10,000 Dividend $10,000 Gross-up $ 4,400 Gross-up _______ NITP $14,400 NITP $10,000 Div C Div C Dividends (10,000) TI $14,400 TI 0 26% tax $ 3,744 DTC (10/17) (2,588) Net Tax $1,156
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Question 2 Your client, Mr. Sweet, a Canadian resident, has recently transferred all his unincorporated candy manufacturing and retailing businesses to a new corporation controlled by him. He has provided you with the following information to calculate his corporate taxes payable. Note that Sweet Ltd. did not pay any dividends in 2010.
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