EFG Corporation ("EFG") is a Canadian-controlled private corporation and has correctly calculated its net income for tax purposes to be $857,000 for the year ending December 31, 2019, as shown below:

Business income $710,000

Taxable capital gains $80,000

Taxable dividends from Canadian public corporations $32,000

Taxable dividends from XYZ Inc. $5,000

Interest on five-year bonds   $30,000

Net income for tax purposes  $857,000

EFG owns 100% of the shares of XYZ. For the current year, XYZ claimed the small-business deduction on $80,000 of its active business income. 

Additional information:

• EFG made charitable donations of $45,000 during the year

• Net capital losses were $35,000 as of January 1, 2019

• Non-capital losses were $50,000 as of January 1, 2019

• At the end of the previous year, EFG had a balance in its non-eligible refundable dividend tax on hand (RDTOH) account of $18,000 and GRIP of $2,000. XYZ received a dividend refund of $1,917 from its non-eligible RDTOH when it paid its dividend of $5,000 to EFG.  

• EFG calculated a dividend refund of $3,000 for the previous year, based on dividends paid in the previous year.

• Eligible dividends of $90,000 and capital dividends of $70,000 were paid by EFG on December 31, 2019. Dividends equal to the GRIP balance were designated as eligible dividends.  

• For 2018, the taxable capital of EFG and XYZ, combined, was below $10,000,000. As well, the combined adjusted aggregate investment income was below $50,000.

Needed:

1. Determine EFG's federal income tax payable for its 2019 fiscal year (Hint: Start with Federal Tax (@38% of taxable income), Less other items.

2. Determine EFG's refundable dividend tax on hand balances at the end of 2019.

3. Determine EFG's dividend refund for 2019.

Answer rating: 100% (QA)

Step 1 1 Income tax payable is actually a form of profile in the existing obligations segment of a companys annual report It is actually put together of tax obligations as a result of the federal auth... View the full answer