World Inc. is a Canadian controlled private corporation (CCPC) that operates a retail business selling cooking utensils, knives, and small appliances for both professional chefs and home cooks. 

Cookhouse

World Inc. is operated out of 

Laval,

Quebec,

and all of the corporation's revenue and expenses are incurred in 

Quebec.

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Requirement 1. Calculate the amount of Federal Taxes Payable under Part I of the Income Tax Act for 

Cookhouse

World Inc. (Round to the nearest cent.)The amount of Federal Taxes Payable under Part I of the Income Tax Act for 

Cookhouse

World Inc. is 

$enter your response here.

Requirement 2. Determine the amount of Part IV Tax Payable by 

Cookhouse

World Inc. (Round to the nearest cent.)The amount of Part IV Tax Payable by 

Cookhouse

World Inc. is 

$enter your response here.

Requirement 3. Compute the closing RDTOH balances for 

Cookhouse

World Inc. for the year ended December 31. (Round amounts to the nearest cent.)The closing eligible RDTOH balance for 

Cookhouse

World Inc. is 

$enter your response here.

The closing non-eligible RDTOH balance for 

Cookhouse

World Inc. is 

$enter your response here.

Requirement 4. Has the corporation maximized its dividend refund in the current year? Why or why not?

The company 

▼

 

has not

has

maximized its dividend refund. In order to ensure that the corporation receives the maximum dividend refund, it should declare dividends equal to 2.608 times the 

▼

 

beginning

closing

RDTOH balances.Requirement 5. 

Cookhouse

World Inc. is in need of additional financing in order to expand operations and is considering an initial public offering (IPO) of shares on the Toronto Stock Exchange to meet its financing needs. If 

Cookhouse

World Inc. becomes a public company in the future, how will this impact its RDTOH balance? What tax planning advice can you provide to the corporation with regard to maximizing its dividend refund prior to going public?If 

Cookhouse

World Inc. becomes a public company in the future, how will this impact their RDTOH balance?

A.Cookhousewould be able to keep its RDTOH balance as RDTOH and dividend refunds are for private and public corporations.B.Cookhousewould only keep 50% of its RDTOH balance as RDTOH and dividend refunds are reduced when a private corporation becomes public.C.Cookhousewould lose its RDTOH balance as RDTOH and dividend refunds are only for private corporations.D.The RDTOH balance for Cookhouseis reset to $0 as RDTOH and dividend refunds are not rolled over when a private corporation becomes public.

What tax planning advice can you provide to the corporation with regard to maximizing its dividend refund prior to going public?

Determine the correct statement pertaining to the tax advice for a CCPC considering going public. Choose the correct answer below.

A.Distribute adequate dividends to maximize the dividend refund.B.To maximize the dividend refund, do not distribute any dividends.C.Declare dividends before going public, but do not pay them until after going publicD.Issue a 2-for-1 share split immediately before going public to maximize the dividend refund.

Requirement 6. Define GRIP and LRIP.

Define GRIP.

In general, this account tracks the portion of a 

▼

 

CCPC's

non-CCPC's

income that has been taxed at 

▼

 

low to normal

zero

general or high

corporate tax rates.

Define LRIP.

In general, this account tracks the portion of a 

▼

 

non-CCPC's

CCPC's

income that has been taxed at 

▼

 

normal to high

low or preferential

high to extremely high

corporate tax rates.Requirement 7. Determine the GRIP balance at the end of the current year for 

Cookhouse

World Inc. The shareholders of 

Cookhouse

World Inc. prefer to receive eligible dividends rather than ineligible dividends. Is there any tax planning advice you can provide to the shareholders of 

Cookhouse

World Inc. that would allow the corporation to designate all of the corporation's dividends as eligible? (Round to the nearest whole dollar.)The GRIP balance at the end of the current year for 

Cookhouse

World Inc. is 

$enter your response here.

The shareholders of 

Cookhouse

World Inc. prefer to receive eligible dividends rather than ineligible dividends. Is there any tax planning advice you can provide to the shareholders of 

Cookhouse

World Inc. that would allow the corporation to designate all of the corporation's dividends as eligible?

Cookhouse

World Inc. should file an 

▼

 

ITA 89(1)

ITA 89(10)

ITA 89(11)

election which will deem the corporation to be a 

▼

 

non-CCPC

CCPC

.

Answer rating: 100% (QA)

A The Federal Taxes Payable under Part I of the Income Tax Act for Cookhouse World Inc is ... View the full answer