Daisy Inc. is a Canadian$-$controlled private corporation located in Montreal, Quebec and

Washington, U$.$S$.$A$.($unincorporated branch$).$ For its fiscal year ended December $31,2023,$

the controller of Daisy Inc. had calculated its income for tax purposes under Division B and

the taxable income as follows:

Domestic sources $$

Retail income$-$ note $7$ $ $130,000$

Advertising agency revenue $60,000$

Rental loss$-$note $6(35,000)$

Wholesale income$-$ note $9200,000$

Interest on outstanding accounts receivable in retailing business $9,000$

Recapture of CCA from sale of fixtures used in retailing business $5,000$

Interest income$-$note $814,000$

Taxable capital gains net of losses $($non$-$active assets$)39,000$

Dividends from non$-$connected taxable

Canadian corporations $($eligible dividend$)16,000$

Dividend from connected corporation $($non$-$eglible dividend$)7,000$

Foreign sources $$

Foreign business income in C$ earned through unincorporated

branch in United States before C$$10,500$ in income tax paid in

United States $35,000$

Division B net income for tax purposes $$480,000$

Division C deductions: charitable donations $($$$26,100+$ $$9,000)(35,100)$

dividends $($Canadian$-$source$)(23,000)$

non$-$capital losses $(6,000)$

net capital losses $(12,000)$

Taxable income $$403,900$

Federal tax @ $38\%$ $$153482$

Federal abatement $($Note $1)(27,263)$

Partial Part I tax $$126,219$

Notes with additional information $$

$(1)$ As stated above Daisy Inc.has permanent establishments in Quebec and the state of

Washington in the United States. Assuming only for the Federal Abatement calculation

the below numbers for point $(1)$ only require no adjustments$)$:

Location Gross

revenue

$($$$000$s$)$

Payroll

$($$$000$s$)$

Operating

profit

$($$$000$s$)$

Gross asset

value $($$$000$s$)$

Quecbec $6503504454,500$

Washington,

U$.$S$.$A

$350150351,700$

Totals $1,0005003036,200$

$(2)$ Daisy Inc. made the following selected payment during the year:

Charitable donations $26,100$

$0975$ Taxation for Canadian Business

$2023-24$ Assignment $2$

$2$

$(3)$ During $2023,$ four quarterly dividends of $$21,000$ of non$-$eligible dividends were declared

which each quarterly dividend$$s total included $$5,000$ of capital dividends They were

declared at the end of each quarter of the $2023$ fiscal year and were paid within two weeks

after their declaration. The dividend for the last quarter of $2023$ was paid in January $2024.$

Dividends of $$9,000$ were $($non$-$eligible dividend$)$ declared in the last quarter of $2022$ which

included capital dividends of $$3,000$ were paid out in January $2023.$ Also in August $2023$

a $$5,000$ eligible dividend was paid out by Daisy Inc.

$(4)$ Daisy Inc. had allocated all but $$95,000$ of its business limit to other associated

corporations. Taxable capital did not exceeded $$10,000,000$ within the associated group.

$(5)$ The balances in the tax accounts on December $31,2022$ were:

Charitable donation carryforward $ $9,000$

Unused business foreign tax credit $4,500$

Non$-$capital losses from $20216,000$

Net capital losses from $202212,000$

Refundable dividend tax on hand $($Non$-$eligible Dividend$)16,000$

Dividend refund for $2022($Non eligible Dividend$)7,000$

$(5)$ The connected corporation which was $25\%$ owned by Daisy Inc. received a dividend

refund

$$1,900$ on the dividends it paid.

$(6)$ The rental property was an unused warehouse that was fully rented on a five year lease.

The net rental income was $$10,000$ for $2023$ before deducting the CCA on the property.

$(7)$ Retail Income includes the sale of a Company delivery truck which was sold for $$16,000$

cash. Recapture on the delivery truck of $$12,000$ was also recorded to Retail Income.

$(8)$ Interest Income was from a loan to the connected corporation who$$s only income was

from active buisness income

$(9)$ Wholesale Income included $$10,000$ Canadian Dollars actually received by the company

earned from a term deposit in a German bank which was net of $$2,000$ withholding tax.

Required:

$($a$)$ Assume that the current year$$s passive income is equal to the prior year$$s passive

income.

Compute the net taxes payable by Daisy Inc. for its $2023$ taxation year making use of all

credits, and payments owing. Show all your calculations. The provincial tax rate is $13$ per

cent.

$($b$)$ Compute the Refundable Tax on Hand showing all your work including the dividend

refund and Part $1$V Tax.

Show all calculations whether or not necessary to the final answer in order to get full

marks.