Epic Inc. is a CCPC with a December 31 taxation year end. The following information relates to the 2021 taxation year. 1. The Company had Canadian source active business income of $237,000. Of this total, it was determined that $126,000 qualified as M&P profits under ITR 5200.
Epic Inc. is a CCPC with a December 31
1. The Company had Canadian source active business income of $237,000. Of this total, it was determined that $126,000 qualified as M&P profits under ITR 5200.
2. The Company received $25,500 in foreign investment income. This was net of $4,500 foreign income tax withheld.
3. Net income for 2021 is $277,000. This is made up of the $237,000 in active business income, the $30,000 in foreign investment income, and $10,000 in taxable
4. Because of a $50,000 2019 non-capital loss balance that was claimed taxable income is $227,000.
5. The Company shares the annual business limit for the small business deduction with two other companies. Epic's allocated share of the business limit is $200,000.
6. Assume that the foreign tax credit for foreign investment income is equal to the amount withheld.
7. For the 2020 taxation year, the combined ADJUSTED Aggregate Investment Income (AAII) of Epic and its associated companies is $44,250 and the combined Taxable Capital Employed in Canada TCEC is $2,440,000.
Required: Calculate the Part I income tax payable for the 2021 taxation year. As the corporation operates in a province that has a reduced tax rate for M&P activity, a separate calculation of the federal M&P deduction is required. Show all of the calculations used to provide the required information, including those for which the result is nil.
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