solve a,b,c and d. Fracto Inc. is a Canadian controlled private corporation with a December 31 year end. For the taxation year ending December 31, 2019, its Net Income For Tax Purposes was made up of the following components: Active Business Income (Note 1) $ 514,400 Dividends From Canadian Corporations: Wholly-Owned Subsidiary (Note 2) 297,400 Portfolio Investments (All Eligible Dividends) 89,600 Canadian Source Interest 44,300 Taxable Capital Gains 93,100 Net Income For Tax Purposes $1,038,800 Note 1 As determined under ITR 5200, $326,000 of this total qualified as M&P profits. As these amounts are allocated to a province which has a special rate for M&P profits, the company calculates the federal M&P deduction. Note 2 As a result of paying these dividends, the subsidiary received a dividend refund of $52,800. None of these dividends were designated as eligible. Other Information: 1. Fracto Inc. is part of a group of several associated companies. It has been agreed that Fracto Inc. will be allocated $100,000 of the group’s annual business limit for purposes of determining the small business deduction. 2. At December 31, 2018, Fracto Inc. had a Refundable Dividend Tax On Hand balance of $12,000. During 2018, Fracto Inc. paid no dividends. 3. At December 31, 2018, Fracto Inc. had a GRIP balance of $126,700. 4. For 2018, Fracto and its associated corporations had ADJUSTED Aggregate Investment Income of $47,650. Their Taxable Capital Employed In Canada was $4,652,000 for 2018. 5. On July 1, 2019, Fracto Inc. paid taxable dividends to its shareholders in the amount of $132,400. It is the policy of the Fracto Inc. to maximize the amount of dividends designated as eligible, regardless of whether or not they qualify for a dividend refund. 6. The Company has available a net capital loss carry forward of $12,000 [(1/2)($24,000)] and a non-capital loss carry forward of $163,400. It plans to deduct both of these items to the extent possible during 2019. Required: Show all of the calculations used to provide the following required information, including those for which the result is nil. For Fracto Inc.’s 2019 taxation year, calculate the following items: A. Part I Tax Payable. B. The refundable portion of Part I Tax Payable. C. Part IV Tax Payable. D. The balance in the GRIP account on December 31, 2019.
solve a,b,c and d.
Fracto Inc. is a Canadian controlled private corporation with a December 31 year end. For the
Active Business Income (Note 1) $ 514,400
Dividends From Canadian Corporations:
Wholly-Owned Subsidiary (Note 2) 297,400
Portfolio Investments (All Eligible Dividends) 89,600
Canadian Source Interest 44,300
Taxable
Net Income For Tax Purposes $1,038,800
Note 1 As determined under ITR 5200, $326,000 of this total qualified as M&P profits. As these amounts are allocated to a province which has a special rate for M&P profits, the company calculates the federal M&P deduction.
Note 2 As a result of paying these dividends, the subsidiary received a dividend refund of $52,800. None of these dividends were designated as eligible.
Other Information:
1. Fracto Inc. is part of a group of several associated companies. It has been agreed that Fracto Inc. will be allocated $100,000 of the group’s annual business limit for purposes of determining the small business deduction.
2. At December 31, 2018, Fracto Inc. had a Refundable Dividend Tax On Hand balance of $12,000. During 2018, Fracto Inc. paid no dividends.
3. At December 31, 2018, Fracto Inc. had a GRIP balance of $126,700.
4. For 2018, Fracto and its associated corporations had ADJUSTED Aggregate Investment Income of $47,650. Their Taxable Capital Employed In Canada was $4,652,000 for 2018.
5. On July 1, 2019, Fracto Inc. paid taxable dividends to its shareholders in the amount of $132,400. It is the policy of the Fracto Inc. to maximize the amount of dividends designated as eligible, regardless of whether or not they qualify for a dividend refund.
6. The Company has available a net capital loss carry forward of $12,000 [(1/2)($24,000)] and a non-capital loss carry forward of $163,400. It plans to deduct both of these items to the extent possible during 2019.
Required: Show all of the calculations used to provide the following required information, including those for which the result is nil.
For Fracto Inc.’s 2019 taxation year, calculate the following items:
A. Part I Tax Payable.
B. The refundable portion of Part I Tax Payable.
C. Part IV Tax Payable.
D. The balance in the GRIP account on December 31, 2019.
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