The following information relates to RAS Limited for the 2020 taxation year:

Taxable income $750,000 Small business deduction 76,000 Part I tax payable 102,500 Net taxable capital gains on active business assets 60,000 Eligible dividend from investment in Canadian bank stocks (nonconnected) 50,000 Eligible dividend from 75% owned subsidiary (No dividend refund was received by the subsidiary.) 25,000 Non-eligible dividend from 90% owned subsidiary (The subsidiary received a non-eligible dividend refund of $5,000.) 30,000 Capital dividends 15,000 Opening balance in NERDTOH 16,750 Opening balance in ERDTOH 45,000 Eligible dividend paid 85,000 Non-eligible dividend paid 200,000 There were no dividend refunds claimed in the prior year. Required: a) Calculate the Part IV tax payable for RAS Limited for 2020. b) Determine the maximum dividend refund for RAS Limited for 2020.

#2(3)
Albertus Co. has correctly computed its income for tax purposes for 2020, as follows: Income from business $200,000 Dividends from taxable Canadian corporations 30,000 Dividends from foreign corporations (arm's length) 15,000 Taxable capital gains 10,000 Net income for tax purposes $255,000 Albertus made charitable donations of $5,000 to registered charities in the year. As well, the company has the following carryover balances from recent taxation years: Net capital loss $12,000 Non-capital loss 15,000 Charitable donations 2,000 Required: Compute taxable income for Albertus for 2020.

#3 (4)
Yellow Quill Ltd. (YQL), a Canadian public company, had net income and taxable income of $1,000,000 for 2020. The breakdown of salaries and revenues by permanent establishment is as follows: Gross revenues Salaries and wages Ontario $ 1,400,000 $ 200,000 Nova Scotia 2,600,000 500,000 $ 4,000,000 $ 700,000 Europe 1,000,000 300,000 Total $ 5,000,000 $ 1,000,000 Required: Calculate YQL's federal Part I taxes payable for 2020. Ignore foreign income taxes

#4 (5)
Pollster, a CCPC, had taxable income in the current year of $500,000, consisting of ABI of $440,000 and AII of $60,000. The annual small business deduction limit for the current year is $400,000. Pollster also received total dividends in the year of $15,000. Of that amount, $9,000 has been designated as eligible dividends. Pollster had a GRIP balance at the end of the preceding year of $50,000. During the current year, Pollster declared and paid a dividend of $100,000 in the current year. They did not pay any dividends in the preceding year. Required: Determine the maximum amount of eligible dividends that may be designated by Pollster for the current year, including the amount of non-eligible dividends paid, if applicable.

#5(6)
Lux Ltd. runs a luxury residence for students attending university in Toronto. Lux has four full-time staff members. In addition, about 15 people clean the building and provide food services to the students in a restaurant that is located on the main floor. These services are provided by Management Inc., which is associated with Lux. Rental income generated by Lux is approximately $5 million per year. Other services, such as food services, and revenue generated from gym memberships provide additional income of approximately $1 million per year. Required: Determine the type of income that Lux Limited earns.

#6(7)
Snazzy Sox Ltd. (SSL) is a large CCPC operating entirely within Canada. During the 2020 taxation year, net and taxable income was determined to be $495,000, all of which is active business income. SSL has one associated company, and the two companies split the annual business limit equally. The combined Taxable Capital Employed in Canada was $13,675,000 for 2019 and $14,000,000 for 2020. During 2019, the aggregate investment income (AII) and the adjusted aggregate investment income (AAII) was $nil for SSL and $72,000 for the associated company. The AII and AAII amounts for 2020 were $nil for SSL and $13,000 for the associated company. 

Required:

Determine the Part I federal tax payable for SSL for 2020.

Answer rating: 100% (QA)

a For 2020 Part IV tax payable for RAS Ltd 64917 b For 2020 Maximum dividend refund for RAS ltd 6108... View the full answer