For the Taxation Year Ending December 31, 2020, Daly Inc

For the taxation year ending December 31, 2020, Daly Inc. has Taxable Income, before consideration of dividends or salary paid to its sole shareholder, of $34,500. The Company's cash balance, prior to the payment of any salary or dividends is $35,200. For the taxation year ending December 31, 2019, Daly Inc. had Net Income For Tax Purposes and Taxable Income of $12,700. The Company is subject to a combined federal/provincial tax rate of 11.5 percent on all of its Taxable Income for both 2019 and 2020.
Bryan Daly, the sole shareholder of Daly Inc., has employment income of over $250,000, and because of this, any additional income will be taxed at a combined federal/provincial rate of 51 percent. The provincial dividend tax credit is equal to 20 percent of the gross up for non-eligible dividends. Mr. Daly has indicated that he would like to remove all of the $35,200 in cash from his Company and has asked you to determine whether it would be better to take it out in the form of all non-eligible dividends or all salary.