Integration—Cost and Benefit of Incorporation for Investment Income /  75

Que.

N.B.

N.S.

P.E.I.

Nfld.

Income earned through a corporation

Corporate income

$1,000

$1,000

$1,000

$1,000

$1,000

Corporate tax

 (466)

 (467)

 (507)

 (507)

 (487)

After-tax amount

(A)

 534 

 533 

 493 

 493 

 513 

Dividend refund

4

 267 

 267 

 247 

 247 

 257 

Available for distribution

 801 

 800

 740 

 740 

 770 

Personal tax of individual

 (319)

 (288)

 (289)

 (287)

 (247)

Net cash to individual

(B)$  482

$  512

$  451

$  453

$  523

Income earned directly by an individual

Personal income

$1,000

$1,000

$1,000

$1,000

$1,000

Personal tax

 (500)

 (468)

 (500)

 (474)

 (423)

Net cash to individual

(C)$  500

$  532

$  500

$  526

$  577

Summary

Tax savings (cost)

of incorporation

1

(B) – (C)$   (18)

$   (20)

$   (49)

$   (73)

$   (54)

Tax deferral

(pre-payment)

2

(A) – (C)$  34

$     1

$     (7)

$   (33)

$   (64)

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