Cloister Inc. is a Canadian controlled private corporation with a December 31 year end. For the 2020 taxation year, Cloister Inc. has Taxable Income, before consideration of dividends or salary paid to its sole shareholder, of $197,000. All of its income has always been from active business activities. The cash balance of the Company, prior to any payments on the current year's taxes, is also equal to this amount.
Its only shareholder, Ms. Sally Cloister, has no income other than the dividends or salary paid by the corporation and has combined personal tax credits of $3,375.
In her province of residence, assume:
• The corporate tax rate is 3 percent on income eligible for the small business deduction.
• The corporate tax rate is 14 percent on other income.
• Personal provincial Tax Payable on the first $150,473 is $16,000. The rate on additional amounts is 12 percent.
• The dividend tax credit is 4/13 of the dividend gross up for non-eligible dividends.
Determine the amount of after tax cash that Ms. Cloister will retain if the maximum salary is paid by the corporation out of the available cash of $197,000. Ignore CPP contributions and the Canada employment tax credit.

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The Answer of Cloister Inc. is a Canadian controlled private corporation with a December 31 year end. For the 2020 taxation year, Cloister Inc. has Taxable Income, before consideration of dividends or salary paid to its sole shareholder, of $197,000. All of its income has always been from active business activities. The cash balance of the Company, prior to any payments on the current year's taxes, is also equal to this amount.
Its only shareholder, Ms. Sally Cloister, has no income other than the dividends or salary paid by the corporation and has combined personal tax credits of $3,375.
In her province of residence, assume:
• The corporate tax rate is 3 percent on income eligible for the small business deduction.
• The corporate tax rate is 14 percent on other income.
• Personal provincial Tax Payable on the first $150,473 is $16,000. The rate on additional amounts is 12 percent.
• The dividend tax credit is 4/13 of the dividend gross up for non-eligible dividends.
Determine the amount of after tax cash that Ms. Cloister will retain if the maximum salary is paid by the corporation out of the available cash of $197,000. Ignore CPP contributions and the Canada employment tax credit.