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

question 1

Essay

Steven James earned $150,000 this year in profits from his proprietorship, which placed him in a 45 bracket. The rate of tax for Canadian-controlled private corporations in his province is 15% on the fi
$500,000 of income. Personal tax rates (federal plus provincial)in James' province are: (All rates are assumed for this question.)
Steven withdraws $3,000 per month for his personal living expenses. All remaining profits are used t taxes and to expand the business. Steven expects the same business after-tax profits next year.
Steven is considering incorporating his business next year. If he incorporates, he will pay himself a g salary of $48,000.

Required:

A. Determine the increase in Steven's cash flow if he incorporates his company? Show all calculation
B. Name the type of tax planning that Steve would be engaging in if he incorporated his company.

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Definitions:

Reference Documentation

Documents containing necessary information on standards, operations, or specifications for reference purposes.

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A condition where a machine or its components are subjected to forces beyond their design capacity, potentially causing failure.