ABC Ltd. is a Canadian-controlled private corporation with head offices in Ottawa, Ontario. ABC is a wholesale company that sells manufactured aluminum eaves troughs directly to builders. It also has a construction business that installs its products (and related products) on consumers' homes. For its fiscal year ended December 31, 2019, the corporation has asked you to look at its calculated Division B income for tax purposes seen below and has asked you to do any adjustments to the Division B income you deem necessary.

Canadian operating profits (Note 2) $390,000

Foreign: income before tax from U.S. branch in C$ (Note 3) 80,000

Royalty income (Note 4) 35,000

Interest income on outstanding A/R in construction business 25,500

Recapture of CCA (Note 5) 75,500

Rental income (Note 6) 39,000

Taxable capital gains net of allowable capital losses (active) 13,000

Profit on sale of excess Land-Note (7) 140,000

Interest Income from loan to a connected corporation (8) 15,000

Dividends from connected corporations who received a refund of $3,000 9,000

Dividends from taxable Canadian corporations non-connected(eligible) 23,000

Division B income for tax purposes $845,000

Notes: (1) Assume that all Taxable capital gains in this question are active assets

(2) Operating profits are from its two businesses; geographic and business line details described below.

(3) Foreign income tax was paid in the amount of C$20,500 on this income.

(4) The royalty income had been determined to be property income.

(5) The recapture resulted from the sale of some equipment used in the construction business.

(6) The rental income was derived from a five-year lease of the entire space of an unused warehouse owned by the corporation.

(7) The Land had been held for approximately 20 years. It was sold as a result of an unsolicited offer and the fact that the company changed it plans on building an extension on its warehouse.

(8) The connected corporation only income is active business income and it used the funds to buy active assets

Additional Information:

(A) The balance in the tax accounts at the end of 2018 and other information from the 2018 taxation year were:

Unused business foreign tax credit $ 6,000

Unused chartible donations 2,400

Refundable dividend tax on hand(non eligible) 30,000

Dividend refund for 2018 (non eligible) 19,000

(B) A net capital loss of $15,000 was realized in June 2018; no capital gains were realized by the corporation in 2018 or in the prior three years.

(C) ABC made charitable donations of $12,500 during the year.

(D) Four quarterly dividends of $40,000 (non eligible) were declared at the end of each calendar quarter of 2019 and, as always, were paid two weeks after their declaration. Similarly, the dividend for the last quarter of 2018 of $35,000 (non eligible) was paid on January 14, 2019

(E) The corporation has permanent establishments in British Columbia, Ontario, and the United States. Its gross revenues, salary and wages, operating profit, and gross asset values are as follows:

Location Gross revenue Payroll

British Columbia 1,750 1,950

Ontario 2,500 900

U.S. 750 150

Totals 5,000 3,000

(F) The corporation has taxable capital of $8,500,000.

Required:

Calculate the federal taxes and provincial taxes at an assumed net tax rate of 12% on federal taxable income payable by ABC Ltd. Assume intially that the General rate reduction is $39,793 and confirm this amount. Also compute the refundable dividend tax on hand balance as at December 31, 2019 and compute the dividend refund for 2019. Show all your work and calculations.