Paprika Ltd. is a CCPC that operates exclusively in Atlantic Canada with a December 31 year-end. Its 2021 Net Income for Tax Purposes contains the following:

Active Business Income $950,000

Net Taxable Capital Gains $113,000

Interest Income $45,250

Dividends (Note 1) $583,750

NIFTP $1,692,000

Note 1: Total dividends received in the 2021 year are made up of the following amounts:

Eligible portfolio dividends from Canadian companies $142,435

Non-eligible dividends from Sage Ltd. (Note 2) $230,000

Non-eligible dividends from Thyme Ltd. (Note 3) $211,315

Total Dividends $583,750

Note 2: Sage Ltd. is a wholly-owned subsidiary of Paprika Ltd. since Paprika owns all of its shares. As a result, Sage is connected to Paprika for the purposes of Part IV. In 2021, the payment of the dividend to Paprika resulted in a dividend refund of $79,200, all of which was attributable to Sage’s non-eligible RDTOH.

Note 3: Paprika owns 60% of the voting shares of Thyme Ltd. As a result, Thyme is controlled by Paprika and is therefore connected for the purposes of Part IV. In 2021, the payment of the dividend to Paprika resulted in a dividend refund of $62,700. Thyme had no GRIP balance at year-end, resulting in all dividends paid to Paprika being designated as non-eligible. Thyme had insufficient non-eligible RDTOH, however, and was forced to use all of its eligible RDTOH to maximize its dividend refund. Assume that 20% of Thyme’s dividend refund is attributable to its eligible RDTOH and 80% to its non-eligible RDTOH.

Additional information:

1. On December 16, 2021, Paprika paid taxable dividends to its shareholders totaling $315,000. No other dividends were paid during the year. The company’s policy is to designate dividends paid as eligible to the extent that it will result in a dividend refund.
2. Paprika has a 2017 net capital loss balance of $76,000. In addition, there is a 2019 non-capital loss balance of $40,500. Paprika would like to deduct the maximum amount of these carryforward losses possible for the 2021 tax year.
3. Paprika has controlled both Sage and Thyme since 2017, and as a result, the three corporations are associated. The companies have agreed that Paprika will be allocated $325,000 of the annual business limit for 2021, Sage $100,000, and Thyme $75,000. All three corporations use a December 31 year-end.
4. The combined adjusted aggregate investment income for the three associated corporations is $48,700 for 2020 and $58,500 for 2021. The taxable capital employed in Canada of the three associated corporations totals $9,125,000 for 2020 and $11,660,000 for 2021.
5. On December 31, 2020, Paprika had an eligible RDTOH balance of $26,875, a non-eligible RDTOH balance of $103,850, and a GRIP balance of $167,000. During 2020, Paprika paid taxable dividends of $96,500, $16,500 of which were designated as eligible. As a result of paying the dividends, Paprika received a dividend refund of $36,991 [(38.33%)($96,500)].

REQUIRED: For Paprika Ltd.’s 2021 tax year, calculate the following items. Show all supporting calculations and explanations.

1. Taxable income.
2. Part I tax payable.
3. The refundable portion of Part I tax is payable.
4. Part IV tax payable.
5. The balance in the GRIP account was on December 31, 2021.
6. The balance in both the eligible RDTOH and non-eligible RDTOH is on December 31, 2021.
7. The dividend refund. Separate the amount attributable to eligible dividends and the amount attributable to non-eligible dividends.
8. Total federal tax payable (net of any dividend refund).