Corporate Taxes Payable (17 marks)

You are the sole shareholder of ABC Corporation. ABC is based in Toronto, Ontario. The company earns 100% of its income in Canada.

The net income for tax purposes (Div B) is $923,000. ABCs taxable capital (debt & equity) is $10.5 million (remember that taxable capital is not the same thing as a capital gain).

The following income / expenses have already been included in the Div B figure provided:

Taxable capital gain (on the sale of an active asset) $34,000

Dividends received from CDN corporations $25,000

Interest income $19,000

ABC also has the following carryover information:

Charitable donations (set to expire this year) $11,000

Net capital loss (from 2014) $107,000

The following information relates to the $25,000 dividends (already included in Div B): hint: this will be helpful for your Part IV taxes calculation, etc.

	% Owned by ABC	Taxable dividend received by ABC	Dividend refund received
Corp. 1	9%	$13,000 (eligible)	$1,300 (Paid out of eligible RDTOH) Received by corp. 1
Corp. 2 is a connected corp.	21%	$12,000 (non-eligible)	$3,300 (Paid out of non-eligible RDTOH) Received by corp. 2

ABC Corp. also paid non-eligible dividends of $15,000 to its sole shareholder in the current year.

The following additional information is available for ABC Corp.

NERDTOH Dec 31, of the prior year $1,000

ERDTOH Dec 31, of the prior year $2,700

Dividend refund received by ABC Corp $0

Capital losses deducted in previous years (in Div C) $0

REQUIRED: You must calculate the corporate taxes payable for the current year. This includes:

Total Part I federal taxes payable for ABC Corp. (10 marks)

Use the framework we used in the webinar to help provide structure

tip: remember to calculate the passive income, i.e. AAII to see whether there a clawback of the SBD is required

you must show your full calculations for all elements in the taxes payable

Ignore provincial taxes payable

Part IV taxes payable for ABC Corp. (2 marks)

Dividend refund for ABC Corp. (2 marks)

The ending balance in the eligible and non-eligible RDTOH for the current year for ABC Corp. (3 marks)