For the year ended August 31, 2019, Zefer Ltd., a Canadian-controlled private corporation, reported a net income before income taxes of $526,500. The statement of income is summarized as follows:

Income from operations

$418,000

Other income:

Interest

5,500

Net gain on sale of assets

103,000

Net Income per Financial Statements

$526,500

The net gain on the sale of assets consists of the following amounts:

Gain on sale of franchise$45,000

The franchise to operate a retail store was acquired seven years previously at a cost of $110,000. It was sold in 2019 for $155,000. The sale proceeds included a cash down payment of $20,000, with the balance payable insixannual instalments of $22,500 plus interest beginning in 2020. The franchise, which qualified as a class 14 asset, had an undepreciated capital cost of $101,200 at the time of the sale and was the only asset in its class.

Gain on sale of warehouse property$80,000

In July 2019, a warehouse property was sold for cash proceeds of $250,000 (land $180,000, building $250,000). The property had an original cost of $370,000 (land $60,000, building $310,000). The building, which was the only asset in class 1, had an undepreciated capital cost of $290,000. After the sale of the warehouse, temporary premises were leased until a new, larger warehouse was constructed. New land was purchased in January 2020 for $200,000. Construction of the new warehouse would be completed by July 2020.

Loss on sale of shares of subsidiary$22,000

Zefer sold shares of a subsidiary corporation for cash proceeds of $495,000.The shares were acquired five years ago for $517,000. Legal fees of $2,200 were paid to draw up the sale agreement and were charged to the legal expense account.

Required:

Calculate Zefer's net income for tax purposes for the 2019 taxation year.