Your Bookstore Is Set Up as an Incorporated Business

question 93

Essay

Your bookstore is set up as an incorporated business.If you draw $70,000 from your bookstore as your salary,such that your bookstore's taxable income for the year becomes $30,000,how much personal tax and corporate tax must you pay to the federal government? By how much would your taxes change if you reduce your salary to $27,950,such that your bookstore's taxable income becomes $72,050? Assume that you pay personal taxes as an unmarried taxpayer,and that the tax rates are as shown below.

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Definitions:

Canadian Exports

Goods or services sold by Canada to other countries.

Federal Crown Corporation

A type of corporation in Canada that is federally chartered and owned by the government to conduct various commercial activities and services.

Translation Exposure

Financial risk associated with the translation of foreign currency financial statements into a single reporting currency.

Exchange Rate Risk

The potential loss to a company's finances or operations due to changes in the exchange rate between currencies.