Fancom Inc. is an Alberta corporation that qualities as a Canadian controlled private company. For the...

  
 

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Fancom Inc. is an Alberta corporation that qualities as a Canadian controlled private company. For the taxation year ending December 31, 2020, the components of its Net Income For Tax Purposes and Taxable Income are as follows: Active Business Income (Note 1) Gross Foreign Business Income (Note 2) Gross Foreign Non-Business Income (Note 2) Interest On Long Term Investments Taxable Capital Gains (Note 3) Eligible Dividends Received On Portfolio Investment Net Income For Tax Purposes Eligible Dividends Received Charitable Contributions Net Capital Loss Carry Forward Deducted Non-Capital Loss Carry Forward Deducted Taxable Income $ 328,000 40,800 31,200 49,900 16,500 21,000 $ 487,400 21,000) 86,400) 13,900) (263,000) $ 103,100 ( ( Note 1 As determined by the Income Tax Regulations, $152,000 of this active business income was manufacturing and processing profits. As these amounts are allocated to a province that has a special rate for M&P profits, the company calculates the federal M&P deduction. Note 2 Foreign jurisdictions withheld $6,120 (15 percent) from the foreign business income and $7,800 (25 percent) from the foreign non-business income. Note 3 The $6,500 is one-half of a capital gain of $33,000. The gain resulted from a disposition of passive investments. Other Information: 1. During the year ending December 31, 2020, Fancom used its existing cash resources to pay taxable dividends of $223,200. Of this total, $49,300 were designated as eligible. 2. On January 1, 2020, Fancom had the following balances: Eligible RDTOH Non-Eligible RDTOH GRIP $14,000 Nil $49,360 During 2019, Fancom designated $8,700 of its dividends as eligible. 3. For 2019, Fancom's ADJUSTED Aggregate Investment Income was $36,450. Its Taxable Capital Employed in Canada was $4,652,300 for 2019. 4. As determined by the Income Tax Regulations, 85 percent of Fancom's Taxable Income can be allocated to a Canadian province. 5. Assume that the foreign business and non-business tax credits are equal to the foreign taxes withheld. Required: Show all of the calculations used to provide the following required information, including those for which the result is nil. A. Determine Fancom's Part I Tax Payable for the year ending December 31, 2020. B. Determine the refundable portion of Fancom's Part I Tax Payable for 2020. C. Determine Fancom's Part IV Tax Payable for the 2020. D. Determine the December 31, 2020, balance in Fancom's GRIP. E. Determine the December 31, 2020, balances in Fancom's Eligible RDTOH and Non-Eligible RDTOH. F. Determine Fancom's dividend refund for 2020, separately identifying the refund related to eligible dividends and the refund related to non-eligible dividends. Fancom Inc. is an Alberta corporation that qualities as a Canadian controlled private company. For the taxation year ending December 31, 2020, the components of its Net Income For Tax Purposes and Taxable Income are as follows: Active Business Income (Note 1) Gross Foreign Business Income (Note 2) Gross Foreign Non-Business Income (Note 2) Interest On Long Term Investments Taxable Capital Gains (Note 3) Eligible Dividends Received On Portfolio Investment Net Income For Tax Purposes Eligible Dividends Received Charitable Contributions Net Capital Loss Carry Forward Deducted Non-Capital Loss Carry Forward Deducted Taxable Income $ 328,000 40,800 31,200 49,900 16,500 21,000 $ 487,400 21,000) 86,400) 13,900) (263,000) $ 103,100 ( ( Note 1 As determined by the Income Tax Regulations, $152,000 of this active business income was manufacturing and processing profits. As these amounts are allocated to a province that has a special rate for M&P profits, the company calculates the federal M&P deduction. Note 2 Foreign jurisdictions withheld $6,120 (15 percent) from the foreign business income and $7,800 (25 percent) from the foreign non-business income. Note 3 The $6,500 is one-half of a capital gain of $33,000. The gain resulted from a disposition of passive investments. Other Information: 1. During the year ending December 31, 2020, Fancom used its existing cash resources to pay taxable dividends of $223,200. Of this total, $49,300 were designated as eligible. 2. On January 1, 2020, Fancom had the following balances: Eligible RDTOH Non-Eligible RDTOH GRIP $14,000 Nil $49,360 During 2019, Fancom designated $8,700 of its dividends as eligible. 3. For 2019, Fancom's ADJUSTED Aggregate Investment Income was $36,450. Its Taxable Capital Employed in Canada was $4,652,300 for 2019. 4. As determined by the Income Tax Regulations, 85 percent of Fancom's Taxable Income can be allocated to a Canadian province. 5. Assume that the foreign business and non-business tax credits are equal to the foreign taxes withheld. Required: Show all of the calculations used to provide the following required information, including those for which the result is nil. A. Determine Fancom's Part I Tax Payable for the year ending December 31, 2020. B. Determine the refundable portion of Fancom's Part I Tax Payable for 2020. C. Determine Fancom's Part IV Tax Payable for the 2020. D. Determine the December 31, 2020, balance in Fancom's GRIP. E. Determine the December 31, 2020, balances in Fancom's Eligible RDTOH and Non-Eligible RDTOH. F. Determine Fancom's dividend refund for 2020, separately identifying the refund related to eligible dividends and the refund related to non-eligible dividends.

Answer rating: 100% (QA)

A Deter mine Fan com s Part I Tax Pay able for the year ending December 31 2020 ANS WER Part I Tax Pay able Federal tax on active business income 328 000 x 15 49 200 Federal tax on foreign business in... View the full answer