Many years ago, in an effort to keep its costs down, Prince Enterprises hired a bookkeeper rather than a fully qualified accountant to prepare its accounting records and corporate tax returns. In a recent audit by Canada Revenue Agency of the past seven years it was discovered that the bookkeeper did not prepare the corporate returns properly.
For 2004 to 2009 inclusive, the bookkeeper calculated earnings before taxes correctly and paid the required 30% tax on these. Prince enterprises is a Canadian controlled private corporation. The company uses CCA rates as its amortization rates. In 2010 the bookkeeper paid no taxes as there was a loss before taxes.
The earnings before taxes, capital gains (losses) and dividends received are as follows:
Capital Dividends
EBT Gains Received
2010 ($ 60,000) $6,000 $2,000
2009 $135,000 $6,000 $3,000
2008 $ 67,500 ($6,000) $7,000
2007 $ 75,000 $7,500 $2,000
2006 $120,000 $12,000 0
2005 $ 97,500 0 $3,000
2004 $ 90,000 $9,000 $4,000
Canada Revenue Agency has indicated that, after its review of the seven years of information, it will be notifying Prince Enterprises of how much tax is due.
How much tax was paid from 2004 to 2010 inclusive?
How much tax should have been paid from 2004 - 2010?