Answer after tax retention with the use of a

20

Answer:
After tax retention with the use of a corporation would be $79,454 ($143,200 - $63,746). This is $1,683 less t
$81,137 that would be retained through direct receipt of this income.
You should advise your client that using a corporation would result in an overall tax cost, making it not ad
to transfer her assets to a corporation.
76) Maximilian Maximus has employment income in excess of $300,000. This means that any additional income will
at a combined federal/provincial rate of 51 percent.
For the year ending December 31, 2020, in addition to his employment income, Max has the following amounts o
investment income:
Interest Income $ 71,000
Non - Eligible Dividends - Portfolio Investments 102,000
Non - Eligible Dividends From A 100 Percent Owned CCPC
(The CCPC Receives A Dividend Refund Of $23,000) 96,000
Because of his extensive use of recreational drugs, Max requires all of the income that is produced by these invest
(and then some).
In his province of residence:
• the corporate tax rate is 2.5 percent on income eligible for the small business deduction
• the corporate tax rate is 12 percent on other income
• the dividend tax credit is 4/13 percent of the dividend gross up for non
-
eligible dividends
Max has asked your advice as to whether there would be any tax benefits associated with transferring his investm
a corporation. Provide the requested advice, including an explanation of your conclusions.