Black Ltd , a Canadian private corporation, owns 40 of the voting shares of White Ltd In the current year, White paid a dividend of $60,000, which triggered a dividend refund of $20,000 to White Black also received dividends of $40,000 from its wholly owned subsidiary, Red Ltd , and dividends of $3...

Dividends received from Nonconnected corporatio ...

Black Ltd., a Canadian private corporation, owns 40% of the voting shares of White Ltd. In the

Question:

Black Ltd., a Canadian private corporation, owns 40% of the voting shares of White Ltd.
In the current year, White paid a of $60,000, which triggered a refund of $20,000 to White. Black also received dividends of $40,000 from its wholly-owned subsidiary, Red Ltd., and dividends of $30,000 from sundry Canadian public corporations in which Black owns less than 1% of the issued shares. Red carries on an active business and, thus, did not receive a refund.
Determine the refundable Part IV tax payable by Black Ltd. for the current year. Income tax reference: ITA 186(1), (2), (4).
Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...