An owner-manager can generally choose whether he wishes to receive compensation in the form of dividends or, alternatively in the form of salary.All other things being equal which of the following would encourage the use of dividends?
A)A desire to make contributions to an RRSP.
B)A low provincial dividend tax credit.
C)A desire to eliminate a large CNIL balance.
D)A high provincial corporate tax rate.

Question

Quizplus · Accepted Answer

A desire to eliminate a large CNIL (Cumulative Net Investment Loss) balance would encourage the use of dividends, as dividends can be used to offset this balance.

An Owner-Manager Can Generally Choose Whether He Wishes to Receive