Pea Nuts Inc, a Canadian-controlled private corporation, has a December 31 year-end and operates only in Canada.  You are Chuck Brown, the Chief Financial Officer.  In 2017, the corporation paid $33,000 in income tax on $150,000 of active business income. In 2018, it paid $40,000 on $180,000 of active business income. At the beginning of 2019, you expected active business income to be a little lower than last year, at $175,000, and this would result in income tax of $38,000 for the year.  While you were on vacation at the end of September 2018, Snoopy, the accounting manager, neglected to make the required instalment payment on time.

Required:

By showing your calculations for all of the options, indicate

the minimum amount that should be paid in instalments for 2019 to be sure of not having to pay any interest on a deficiency of instalments, and

the specific dates on which these instalments must be paid.

(b)        Assume that your estimate of the income tax for 2019 was inaccurate because the actual income tax amount turns out to be $45,000 for 2019. Also, assume that the corporation paid the minimum required instalments computed in (a) on time. How much is the balance due and on what specific date must it be paid?

(c)        Assume that, at the end of November, it looked to you like the corporation had overpaid its monthly tax by instalments for 2019, because income was a little lower than expected in the preceding two months, so the corporation paid no installments for November and December. Assume, however, that it turns out that even your original estimate of income tax for the year was too low, because actual income tax owing was $45,000 for 2019. Also, assume that the corporation pays the full amount owing on the balance-due date. How much interest is payable on that date, if the prescribed rate for the first two quarters of 2018 was 10%; for the second two quarters of 2019, 9%; and for all of 2020, 8%? What is the amount due on that date?

(d)        If the CRA issues a Notice of Assessment for the 2019 corporate tax return on September 10, 2020, and the interest on the deficient installments was incorrectly calculated by the CRA, what is the specific date deadline for filing a Notice of Objection?

(e)        What is the specific date deadline for the CRA to issue a Notice of Reassessment for the 2019 corporate return?

When must the final balance of federal income tax be paid for the 2017 taxation year? State the possibilities and applicable conditions 

What is the filing deadline for the 2017 income tax return of the corporation? 

Answer rating: 100% (QA)

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