ABC Ltd., a Canadian-controlled private company (CCPC) located in Ontario and has correctly computed its net income under Division B for the year ended December 31, 2019, before CCA on the equipment purchase, noted below, as follows:

Income from active business $100,000

Eligible dividends from non-connected taxable Canadian corporations 15,000

Interest income from public company bonds 20,000

Division B Net income before CCA $135,000

In 2019, ABC Ltd. purchased new computer equipment for its active business at a cost of $15,000. ABC Ltd. also made charitable donations of $5,000 in 2019. All of ABC Ltd.’s income is earned in Canada. ABC Ltd. is associated with another CCPC, XYZ Ltd. The small business deduction annual business limit has been allocated $400,000 to XYZ Ltd. and $100,000 to ABC Ltd. It had no Eligible or Non-eligible RDTOH at the beginning of the year and did not pay any taxable dividends in the year.

Compute the following for ABC Ltd. for 2019:

(A) Minimum Taxable income

(B) Federal Part I tax payable.

(C) Refundable Part IV tax and refundable Part I tax

(D) Balance in the Non-eligible RDTOH account at December 31, 2019

(E) Balance in the Eligible RDTOH account at December 31, 2019

(F) Dividend refund

Answer rating: 100% (QA)

A Minimum Taxable Income Section 3 Dividion B Net Income 135000 112 Less Dividends from nonconnected ... View the full answer