Compute the dividend refund

Assignment Help Taxation

Reference no: EM132949772

Taxation Assignment

BLACK Ltd. is a Canadian-controlled private corporation which was incorporated in 2001 with a December 31 year end. BLACK Ltd. income for tax purposes for its December 31st, taxation year end was calculated as follows:

Distribution Income . . . . . . . . . . . . . . .		. . . . . .	. . . . . . . . . .	$340,000
Dividend from non connect taxable Canadian Corporations note 7				5,000
Wholesale income............................................................................				100,000
Dividends from taxable 20% Canadian subsidiary corporations . . . note7. . . . . RentalIncome Note1. ............................................................................ .				35,000 24,000
interest income note 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .				5,000
royalty income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .				8,000
Capital gain note 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .				36,000
Recapture of CCA note 3.................................................................				40,000
Sale of Land note 4.............................................................................				30,000
Long term investment income...............................................................				57,000
U.S. interest income ($4,500 withheld)	N o t e		5 . . . . . . . . . . . . . . . . . . . .	16,000
U.S. business income ($25,000 tax paid) . .Note 6 . . . . . . . . . . . . . . . . . . . . .				96,000
Income under Division B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .				$792,000
Donations to registered charities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .				$ 33,000
The company also has the following balances at January 1, 2020:
Net capital loss f r o m J u n e 2 0 0 0 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .				$ 20,000
Charitable donations carried forward from 2017 . . . . . . . . . . . . . . . . . . . .				22,000
Refundable dividends on hand Dec 31, 2019 ...non eligible ...................				25,000
Dividend refund for 2019............non eligible......................................				5,000
Refundable dividend on hand Dec 31, 2019..................eligible..............				10,000

Non capital losses from 2018........................................................

14,000

1) BLACK rented a building to its only subsidiary who only had active business income

2) Interest was earned on Account receivable outstanding

3) The capital gains and recapture was a result of selling some of BLACK's old machinery

4) Land was held as inventory and sold

5) The fund above are in Canadian dollars and the fund stated is the net figure after taxes

6) The fund above are in Canadian dollars and the fund stated is the gross figure before taxes

7) All dividend received are non-eligible dividends. A refund was received of $6,000 by the subsidiary as a result of paying out its dividend.

8) Note that no dividend refunds were received for the 2019 for eligible dividends

(A) The corporation has permanent establishments in Alberta, Ontario, and the United States. Its gross revenues, salary and wages are as follows:

*Location*	*Gross revenue ($000s)*	*Payroll ($000s)*
Alberta	2,450	1,800
Ontario	2,600	1,600
U.S.	850	400
Totals	5,900	3,800

(B) The corporation has taxable capital of $9,500,000.

(A) You have been hired by Black Ltd. to review the given information and to compute the federal Part I tax and provincial tax at a 15% rate on federal taxable income for the 2020 taxation year. Show in detail the calculation of all deductions in the computation, using a separate schedule for each special deduction. In calculating the small business deduction list all ineligible items of income, if any, and indicate the amount of the business limit available for the subsidiary.

(B) Compute the dividend refund for 2020 and the amount of any RDTOH to be carried forward.

Attachment:- Taxation Assignment.rar

Reference no: EM132949772

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