Lisgar Ltd. is a CCPC with a December 31 year end. For the 2020 taxation year, it has Taxable Income, before consideration of dividends or salary paid to its sole shareholder, of $325,000. All of this income is from active business activities. Its available cash balance is also equal to $325,000.
Harry Lisgar is the only shareholder of Lisgar Ltd. His only income is either salary or dividends from Lisgar Ltd and he has tax credits of $4,550.
In his province of residence, assume:
• The corporate tax rate is 3 percent on income eligible for the small business deduction.
• The corporate tax rate is 13 percent on other income.
• Personal provincial Tax Payable on the first $214,368 is $27,000. The rate on additional amounts is 18 percent.
• The dividend tax credit is 25 percent of the dividend gross up for non-eligible dividends.
Determine the amount of after tax cash that Mr. Lisgar will retain if the maximum salary is paid by the corporation out of the available cash of $325,000. Ignore CPP contributions and the Canada employment tax credit.

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The Answer of Lisgar Ltd. is a CCPC with a December 31 year end. For the 2020 taxation year, it has Taxable Income, before consideration of dividends or salary paid to its sole shareholder, of $325,000. All of this income is from active business activities. Its available cash balance is also equal to $325,000.
Harry Lisgar is the only shareholder of Lisgar Ltd. His only income is either salary or dividends from Lisgar Ltd and he has tax credits of $4,550.
In his province of residence, assume:
• The corporate tax rate is 3 percent on income eligible for the small business deduction.
• The corporate tax rate is 13 percent on other income.
• Personal provincial Tax Payable on the first $214,368 is $27,000. The rate on additional amounts is 18 percent.
• The dividend tax credit is 25 percent of the dividend gross up for non-eligible dividends.
Determine the amount of after tax cash that Mr. Lisgar will retain if the maximum salary is paid by the corporation out of the available cash of $325,000. Ignore CPP contributions and the Canada employment tax credit.