Prepare an analysis to explain each type of dividends

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Question - Matthew is the sole owner of MIC Inc.  MIC Inc is qualified as a Canadian Controlled Private Corporation (CCPC).  MIC Inc's main operation is to sell household disinfectant products.  Due to the pandemic, MIC Inc had a profitable year in 2020 and Matthew did not apply for any government assistance program last year.  Matthew knew that there are 3 types of dividends a CCPC can declare, but he isn't sure how to designate between each of them to minimize his tax liability.  Matthew is planning to declare dividends of $100,000.

-Capital Dividends Account Balance: $50,000

-Eligible Return on Dividends Tax On Hands (ERDTOH): $80,000

-Non-Eligible Return Dividends Tax On Hands: $80,00

Required - As a CPA, prepare an analysis to explain each type of dividends and how does Matthew allocate the amount of dividends to minimize tax liability.

Reference no: EM133092390

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