Epic Inc. is a Canadian controlled private corporation with a December 31 year end. The following information is available for the year ending December 31, 2019.

1.   The Company had Canadian source active business income of $237,000. Of this total, it was determined that $126,000 qualified as manufacturing and processing profits under ITR 5200.

2.   During 2019, the Company received $25,500 in foreign investment income. This was net of $4,500 that was withheld in the foreign jurisdiction.

3.   The 2019 Net Income For Tax Purposes is equal to $277,000. This is made up of the $237,000 in active business income, the $30,000 in foreign investment income, and $10,000 in taxable capital gains.

4.   Because of a $50,000 non-capital loss that was carried forward, Taxable Income for 2019 is equal to $227,000.

5.   The Company shares the annual business limit for the small business deduction with two other companies. Epic’s share of this limit is $200,000.

6.   Assume that the tax credit for foreign investment income is equal to the amount withheld.

7.   For 2018, the combined ADJUSTED Aggregate Investment Income of Epic and its associated companies is $44,250. Their Taxable Capital Employed In Canada totalled $2,440,000 for 2018.

Required: 

Calculate the federal Part I Tax Payable for the taxation year ending December 31, 2019. As the corporation operates in a province that has a reduced tax rate for M&P activity, a separate calculation of the federal M&P deduction is required. Show all of the calculations used to provide the required information, including those for which the result is nil.

Answer rating: 100% (QA)

Taxable Income Given 227000 Base Amount Of Part I Tax 38227000 86260 Federal Ta... View the full answer