Annual investment income comes from dividends

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Reference no: EM133472345

Question: A long-time Windsor Ontario business acquaintance, Doug James, who is 50 years old, has come to see you on November 1, 2022 for tax advice. Although he has heard about business incorporation, the possibility of double taxation has been a major deterrent to his incorporation to date. Doug James operates "Football Accessories" as a sole proprietorship. The operation consists of three retail outlets that sell all types of football equipment. The business services both individual and corporate accounts.

The business has produced profit before income tax from sales over the past three years in the amounts of $470,000 (2020), $530,000 (2021) and $580,000 (2022). In addition to his sports stores, Doug James generates substantial investment income which by itself has placed Doug James in the 53.53% personal income tax bracket. That annual investment income comes from dividends from Canadian public corporations ($150,000 annual cash dividends) and bond interest ($100,000).

Due to a need to finance business growth, Doug and his spouse, Linda James, have not saved any funds for retirement currently although they plan to retire at age 65

Reference no: EM133472345

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