Reference no: EM132269931
Prepare a Canadian cooperate tax return.
All of the tax forms that you would need would be provided by the software.
You have to do the calculations "using Canadian rates and principles" then input it in the software.
Tax Software Assignment Problem
RadionFaux Industries Ltd. (RIL) is a Canadian controlled private corporation, located at 123 ABC Street in Ottawa, Ontario K4E 1A1. Its Ontario Corporation tax account number is 1234567. Its phone number is (613) 111-1111. It was incorporated on February 24, 1990 in Ottawa.
The government's Crown Copyright no longer permits us to use fake Business Numbers in soft- ware problems. To reduce the number of ProFile's error messages because of this, enter NR (for not registered) in the Business Number field.
The Company has 1,000 shares of common stock issued and outstanding, all of which are held by Margaret Ottawa (SIN 527-000-301).
Ms. Ottawa, the president and director of the Company, is the person who should be contacted with respect to matters concerning the Company's books and records. She is the authorized person as well as the signing officer.
RIL is a retailer of pet supplies. All of its sales occur within Canada. It has net assets of $235,000 on December 31, 2018. This includes a few investments that Ms. Ottawa inherited from her father two years earlier.
RIL owns all of the 500 common shares of OttawaFaux Inc., which holds most of the invest- ments Ms. Ottawa inherited from her father. The common shares have a book value of $1,200,000. OttawaFaux Inc. has the same location and phone number as RadionFaux Indus- tries Ltd. OttawaFaux Inc. has a December 31 fiscal year end. Enter NR (for not registered) in the Business Number field for OttawaFaux Inc.
OttawaFaux Inc. is also involved in earning active business income through the breeding and sale of championship dogs. It has total assets of $2,000,000 and total revenues for 2018 of $200,000. Its Taxable Capital Employed In Canada was $350,000 as at December 31, 2017, and $365,000 as at December 31, 2018.
The following information applied to RIL:
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Taxable Capital Employed In Canada - 2017
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$328,000
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Taxable Capital Employed In Canada - 2018
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411,000
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Total Assets As At December 31, 2018
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750,000
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RDTOH As At December 31, 2017
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5,200
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Dividends Declared And Paid During 2017
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Nil
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GRIP Balance As At December 31, 2017
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11,750
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Capital Dividend Account As At December 31, 2017
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6,000
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RIL does not use International Financial Reporting Standards (IFRS). For the taxation year ending December 31, 2018, RIL's Income Statement, before any deduction for income taxes, was as follows:
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Sales Revenues
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$580,000
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Interest On Long-Term Debt
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27,500
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Interest Received On Foreign Bank Account (Note 1)
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18,000
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Eligible Dividends On Royal Bank Shares
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17,500
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Non-Eligible Dividends From OttawaFaux Inc. (Note 2)
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42,000
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Gain On Sale Of Shares (Note 3)
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27,000
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Total Revenues
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$712,000
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Cost Of Goods Sold
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$208,000
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Amortization Expense
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122,000
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Other Operating Expenses
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147,000
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Total Expenses (Excluding Taxes)
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$477,000
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Net Income (Before Taxes)
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$235,000
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Note 1 This interest is net of $2,000 in taxes withheld in Ireland.
Note 2 As a result of paying this $42,000 in dividends to RIL, OttawaFaux Inc. received a dividend refund of $14,000.
Note 3 On March 23, 2018, RIL sold 2,700 shares of Canadian Imperial Bank of Commerce. The common shares had cost $118,800 on June 6, 2015 and were sold for net proceeds of $145,800.
Other Information:
1. Expenses include a deduction for charitable donations to the Ottawa Civic Hospital in the amount of $5,000.
2. RIL's Expenses include penalties of $3,500 resulting from a judgment in the Tax Court Of Canada.
3. RIL reimbursed Ms. Ottawa $34,000 for business meals and entertainment for clients and suppliers during the year.
4. During the year, RIL incurred $20,000 in landscaping costs. For accounting purposes these are being treated as a capital asset, to be amortized using the straight-line method over 10 years. The related amortization is included in the Amortization Expense shown on the Income Statement.
5. The opening UCC balances were $246,000 for Class 1, $135,000 for Class 8 and $90,000 for Class 10. The only fixed asset disposition during the year was the sale of a delivery truck. The truck had cost $35,000 and was sold for its net book value of $12,000. The only fixed asset acquisition was $52,000 in office furniture on April 1, 2018.
6. During 2018, RIL paid taxable dividends of $92,000. Of these dividends, $25,000 was designated as eligible. On September 1, 2018, RIL also elects to pay the maximum capital dividend allowable.
7. RIL allocates $60,000 of the annual business limit to OttawaFaux Inc. This is $5,000 more than OttawaFaux Inc. can utilize in 2018, but RIL cannot use the excess.
8. RIL paid quarterly income tax instalments of $8,000 each on the 20th of March, June, September and December during 2018.
9. RIL has a website describing the products it carries, but no income is generated from the website.
Required: Prepare the federal corporate tax return for RIL for the 2018 taxation year using the ProFile T2 corporate software program. On the ProFile schedule titled "Info", the Filing question "Complete return from GIFI?" is answered Yes by default, click No.
Attachment:- Tax return Assignment.rar