Canada Corp. is owned 100% by specified non-residents. The existing equity in the corporation (beginning retained earnings, the monthly average of beginning contributed surplus by specified non-residents, and the monthly average of beginning paid-up capital of the specified non-residents’ shares) is $200,000. Interest paid in the year on a $1 million debt (average of the greatest amount of debt for each month) due to the specified non-resident shareholders was $125,000 for 2016.

REQUIRED

What is the impact, if any, of the thin capitalization rule on the corporation’s 2016 Division B income calculation?