FINA-5010 Taxation-Corporate Tax Assignment

Assignment Help Taxation

Reference no: EM132410687

FINA-5010 Taxation-Corporate Tax Assignment - Fanshawe College, Canada

Amos Burton, a Canadian resident, is your client. He has a new business that operates in the area of spaceship maintenance consulting. He estimates that his new business will produce income of $130,000 per year. If he incorporates this business in 2019, the income would be eligible for the small business deduction and all dividends paid would be non-eligible. In the province where he lives, such corporate income is taxed at a combined federal / provincial rate of 14%. Amos has other income sources that place him in a combined federal / provincial tax bracket of 42%. In his province, the provincial dividend tax credit for non-eligible dividends is equal to 20% of the gross up.

1. Would your client save taxes if he was to channel this source of income through a corporation? Please provide an answer based on numbers alone. Please show all the necessary calculations.

2. Mr. Burton's fiancée, Clarissa Mao, also a Canadian resident, has a similar situation. She has a new consulting business that she estimates will produce an annual income of $100,000. She is planning to incorporate this business in 2019, and if she does, the income will be eligible for the small business deduction and all dividends paid will be non-eligible. In her province (she resides in a different province than Mr. Burton), such corporate income is taxed at a combined federal / provincial rate of 15%. Clarissa is taxed at a combined federal / provincial rate of 43%. The provincial dividend tax credit rate for non-eligible dividends is equal to 29% of the gross up. Would Clarissa save taxes if she was to channel this source of income through a corporation? Please provide an answer based on numbers alone. Please show all the necessary calculations.

3. Amos wants to know whether there are other advantages to incorporate a business (in addition to potential tax savings). Please provide two (if any).

4. Amos wants to know whether there are any disadvantages to incorporate a business. Please provide two (if any).

5. Amos wants to know whether he can get paid capital dividends from his business as he heard that these can be received free of tax. Please provide a brief explanation (i.e. yes, no, and why).

6. Amos informs you that he and Clarissa plan to get married in 2019 shortly after they incorporate their businesses. He wants to know whether that event would trigger any tax consequences for their corporations.

7. (Optional) Amos also wants to show him how to prepare a 2018 T2 corporate return. He wants you to demonstrate how to prepare a corporate tax return for a business using a T2 tax software of your choice, for a corporation with a taxable income of $130,000, no assets or liabilities. He would be the sole shareholder of the business.

Note: All advice answers to your client should be clear and concise, professional and free of grammar errors. Please submit your answer in a Word or Excel document (plus a PDF document of the tax return if you choose to prepare one).

Reference no: EM132410687

Questions Cloud

Correct conventions of standard american english : Use well-structured sentences, audience-appropriate language, and correct conventions of standard American English.

Explain how racial and ethnic diversity in brazilian culture : Explain how racial and ethnic diversity in Brazilian culture differs from that in the United States and how this may affect inequalities in society.

Political leadership and government : Explain how Indians feel about their political leadership and government. Are they trusting and approving of its performance, or not?

COMP1009 Project Management Assignment : COMP1009 Project Management Assignment Help and Solution, Middle East College, - Assessment Writing Service, Level 6 - Evaluate the tools and techniques.

FINA-5010 Taxation-Corporate Tax Assignment : FINA-5010 Taxation-Corporate Tax Assignment Help and Solution, Fanshawe College, Canada. Provide disadvantages to incorporate a business

Draw the initial long-run equilibrium in an ad-as diagram : 1. Consider an economy that begins with real GDP equal to potential GDP. There is then a sudden increase in the prices of raw materials.

What are auction mechanisms : What are auction mechanisms? Who decides them? How mechanism may influence outcomes? Give one or two examples.

Define observation related to selected determinant of health : During your tour of the city, describe 1 observation related to the 3 selected determinants of health. (a total of 3 observations must be described).

How could you use the research in your own practice as an np : Summarize the research presented. How was the theory used? How do the research findings either support or refute the use of the theory in practice?

User Account

All Pages