Explanation
To calculate the federal tax liability from the investment income, we need to consider the following steps:
Convert the foreign dividend to Canadian dollars using the exchange rate. In this case, $882.02 USD x
1.3605 = $1,200.00 CAD.
Gross up the eligible dividend by the enhanced dividend gross-up rate of 38%. In this case, $1,800 x
1.38 = $2,484.
Add the grossed-up eligible dividend and the foreign dividend to get the total taxable income from dividends. In this case, $2,484 + $1,200 = $3,684.
Multiply the total taxable income from dividends by the federal marginal tax rate of 29% to get the gross federal tax payable. In this case, $3,684 x 0.29 = $1,068.36.
Multiply the grossed-up eligible dividend by the federal dividend tax credit rate of 15% to get the federal dividend tax credit. In this case, $2,484 x 0.15 = $372.60.
Subtract the federal dividend tax credit from the gross federal tax payable to get the net federal tax liability. In this case, $1,068.36 - $372.60 = $695.76.
Therefore, Firmansyah's federal tax liability from his investment income is $695.76.
References: 1: Canadian Investment Funds Course - IFSE Institute 2 (Unit 9: Retirement)