Reference no: EM132809514
Question
The controller of Above All Inc. (AA Inc.) provided you with the following
selected information related to the 2020 taxation year ended December 31, 2020. AA Inc. is a Canadian-controlled private corporation. AA Inc. did not have taxable capital in excess of $10,000,000 in 2019.
Canadian manufacturing profits $451,500
Canadian retail business income 50,000
Taxable capital gains(non-active) 4,500
Interest income:
Canadian long-term bonds 40,000
Interest on overdue accounts receivable 5,000
Dividend income:
From taxable Canadian corporations(eligible dividend)
(AA owns less than 5% of the shares of these corporations) 9,000
From U.S. corporations (before U.S. tax of $1,800)
(these corporations are not foreign affiliates) 12,000
Non capital losses from prior years applied in the calculation of taxable income 55,000
Net capital losses from prior years applied in the calculation of taxable income 4,500
Calculations correctly prepared under the Income Tax Act
Taxable income $503,500
Part I tax payable (including additional refundable tax) 66,682
Foreign non-business tax credit 1,800
Miscellaneous Items
Refundable dividend tax on hand as of December 31, 2019 (non-eligible) $20,000
Dividend refund received in respect of the 2019 taxation year (non-eligible) 9,000
Taxable dividends paid during 2020 (non-eligible) 120,000
Required:
Determine, for AA Inc., by clearly presenting all component parts and their calculations,
-the amount of the small business deduction, and (b) the amount of the dividend refund for 2020.
Do not re-compute the Part I tax and the other related tax credits. Assume that they have been computed correctly.