Superior Travel Agency is a CCPC that was incorporated 25 years ago. Its head office is situated in Calgary, Alberta and it has branches (permanent establishments (PEs)) in both Denver Colorado, and Austin, Texas. Its taxation year-end is December 31. All of the Company's Canadian income is active business income.

The Company's 2021 net and taxable income are $219,000. This amount includes $32,000 (Canadian) in active business income that was earned by the two PEs in the United States. U.S. income taxes of $9,600 were paid with respect to the $32,000 earned in the U.S.

For purposes of calculating the federal abatement, assume that 90% of the Company's taxable income is allocated to a province.

Superior Travel Agency’s Taxable Capital Employed In Canada (TCEC) was $11 million in 2020 and 13 million in 2021. Adjusted Aggregate Investment Income (AAII) was nil in both 2020 and 2021.

Required: Calculate Superior Agency’s Part I income tax payable for the 2021 taxation year. Assume the foreign business income tax credit is equal to the foreign income tax withheld. (This is the Canadian Taxation).

Answer rating: 100% (QA)

Net income in 2021 219000 including 32000 PEs 187000 Tax liability will be 32000 10 3200 ... View the full answer