Corporate Tax Planning and Profit Distribution: ACCT746 Assignment

This assignment solution addresses corporate taxation and profit distribution strategies, focusing on a Canadian context. Part A involves a one-person company scenario, comparing salary versus dividend compensation options, considering tax residency and purchase of goods. Part B identifies the core issue as profit distribution methods. Part C analyzes tax implications for different profit levels, comparing salary and dividend distribution, considering provincial and federal tax rates, and the small business deduction. Answer 2 delves into Canadian corporate income tax, including federal and provincial levies, tax years, capital cost allowance, and capital gains. It also covers non-resident taxation, with a case study involving a US company (USCO) and the application of a Double Tax Avoidance Agreement, assessing the presence of a permanent establishment and the taxation of income generated in Canada.