Steven Earned $150,000 This Year in Profits from His Proprietorship

question 6

Essay

Steven earned $150,000 this year in profits from his proprietorship. Personal tax rates (federal plus provincial) in Steven's province are:
The combined federal and provincial rate of tax for Canadian-controlled private corporations in Steven's province is 13% on the first $500,000 of income.
(All rates are assumed for this question.)
Steven has been considering incorporating his business.
Required:
A. How would Steven's after-tax profits have differed if the company had been incorporated? Show all calculations.
B. Name the type of tax planning that Steve would be engaging in if he incorporated his company.

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Definitions:

Major Depressive Disorder

A mental health challenge signified by a perpetual state of despondence or a disconnection from pleasures, notably compromising daily operations.

Despondency

A state of low mood and aversion to activity, often associated with feelings of hopelessness and sadness.

Suicidal Thoughts

Thoughts about or an inclination towards ending one's own life.

Major Depressive Disorder

A mental disorder characterized by a persistent and intense feeling of sadness or despair and/or a loss of interest in activities, often accompanied by other symptoms such as changes in sleep, appetite, and energy level.