What course of action would likely be MOST beneficial

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Question - Steve and Barney are the only two shareholders of Near North Products Inc., a private Canadian corporation. Steve owns 49% of the shares. The tax rate of the corporation after applying the general rate reduction is 25%. Steve is a resident of Canada; Barney lives in the United States and is not a Canadian resident. This year, the corporation had $60,000 in taxable business income and Steve and Barney are considering the possibility of paying the after-tax amount out either as dividends or as bonuses. Steve is in a 29% federal tax bracket and a 19.7% provincial tax bracket.

Dividend Tax Credit Ehanced Dividend Tax Credit

Federal 131/3% 15.02%

Provincial 5.13% 6.70%

What course of action would likely be MOST beneficial for Steve and why?

Reference no: EM132946409

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