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FMGT 4410 – Practice MidtermQuestion #1During 2019, Mr
FMGT 4410 – Practice MidtermQuestion #1During 2019, Mr. Franz Schlitz receives $23,500 in eligible dividends from Canadian public corporations. Hisincome is such that this additional amount will be taxed at a 29 percent federal rate and a 14 percent provincial rate. On eligible dividends, the province has a dividend tax credit equal to 25 percent of the gross up. Determine thetotal federal and provincial tax that will be payable on these dividends and his after tax retention
Expert Solution
Exam Exercise Solution Seven - 11 (Eligible Dividend Income)Eligible Dividends Received $23,500 Gross Up (38%) 8,930 Taxable Dividends $32,430 Combined Federal/Provincial Tax Rate (29% + 14%) 43% Tax Before Credit $13,945 Dividend Tax Credit [(6/11 + 25%)(38%)($23,500)] ( 7,103)Tax Payable $ 6,842 The after tax retention is $16,658 ($23,500 - $6,842). Note that to calculate this amount, the taxes are deductedfrom the dividends received and not the grossed up taxable dividends
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