A Canadian corporation has a branch office in the United Kingdom (UK). The branch earns CDN $1,000,000. For the year, the UK corporate tax rate is 25% and the Canadian corporate tax rate is 40%. How much tax would Canada collect on the UK branchs income?

Multiple Choice

None, as the tax treaty between Canada and the UK would preclude Canada from taxing the UK branch income.

$150,000, equal to $1,000,0000 the 15% difference between the Canadian and UK tax rates.

$400,000, equal to $1,000,000 40% Canadian rate.

$250,000, equal to $1,000,000 25%.