1-Company A, a Canadian-controlled private corporation (CCPC), owns 25% of the voting shares of Company B, another CCPC. Company B earns both active business income that is subject to the small business deduction (SBD) and investment income. Company B pays total taxable dividends of $15,000 and receives a dividend refund of $2,500. What amounts of Part I and Part IV tax must Company A pay on its dividend income from Company B?

Multiple Choice

Part I tax of $4,000 and Part IV refundable tax of $625.

Part I tax of $0 and Part IV refundable tax of $625.

Part I tax of $1,437 and Part IV refundable tax of $625.

Part I tax of $0 and Part IV refundable tax of $1,437.

2-

In both 2022 and 2023, a Canadian-controlled private corporation (CCPC) earns business income of $215,000, and interest income of $100,000. An associated corporation has used $130,000 of the business limit. What amount of the small business deduction (SBD) can the CCPC claim in 2023?

Multiple Choice

$16,150

$21,850

$22,800

$40,850

3-

Specified investment business income does not include

Multiple Choice

Rents

Interest

Capital gains

Dividends

4-

In 2023, Opco, a Canadian-controlled private corporation (CCPC), earns taxable income of $580,000, which includes interest income of $10,000. An associated corporation has used $160,000 of the small business deduction (SBD) limit. What amount can Opco claim for the SBD?

Multiple Choice

$77,900

$95,000

$64,600

$110,200

5-

Which of the following is a disadvantage of incorporating a business?

Multiple Choice

A shareholder cannot also be an employee of a corporation.

Dividends are paid by a corporation, and received by a shareholder, only when declared.

Losses of an incorporated business cannot be used to offset other income of a shareholder.

The risk of business failure can be reduced during its initial period of operation.

6-

On the payment of any dividend by a Canadian-controlled private corporation (CCPC), the tax refund to the corporation is equal to 38 1/3 % of the lesser of (a) the dividend paid and (b) the relevant refundable dividend tax on hand (RDTOH) account balance.

Group startsTrue or False

7-

A personal services business (PSB) would not include a corporation that provides services on a fee-for-service basis, where an employer-employer relationship does not exist, even if that work was done by a shareholder of the corporation.

Group startsTrue or False

8-

A Canadian-controlled private corporation (CCPC) is required to pay refundable tax on all its income from investments.

Group startsTrue or False

9-

Any loans to shareholders do not cause tax problems to the shareholder if interest is charged on the loan and the loan is repaid within a reasonable period of time.

Group startsTrue or False

10-

Active business income (ABI) is calculated by increasing net income for tax purposes by the corporation's specified investment income and personal services business (PSB) income.

Group startsTrue or False