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Question #2During 2019, Ms
Question #2During 2019, Ms. Marion Blatz receives $5,600 in non-eligible dividends from taxable Canadian corporations. Herincome is such that this additional amount will be taxed at a 26 percent federal rate and a 10 percent provincial rate. On such non-eligible dividends, the province has a dividend tax credit equal to 38 percent of the gross up. Determine the total federal and provincial tax that will be payable on these dividends and her after tax retention.
Expert Solution
Exam Exercise Solution Seven - 13 (Non-Eligible Dividend Income)Federal and provincial Tax Payable on these dividends would be calculated as follows:Non-Eligible Dividends Received $5,600 Gross Up (15%) 840 Taxable Dividends $6,440 Combined Federal/Provincial Tax Rate (26% + 10%) 36% Tax Before Credit $2,318 Dividend Tax Credit [(9/13 + 38%)(15%)($5,600)] ( 901)Tax Payable $1,417 The after tax retention is $4,183 ($5,600 - $1,417). Note that to calculate this amount, the taxes are deducted fromthe dividends received and not the grossed up taxable dividends.
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