Problem 6 Calculation of Taxable Income / Tax Payable - Corporation

Medtech Inc. is a Canadian controlled private corporate. It uses a taxation year which ends on December 31. At January 1, 2020, the balance in the Company's Non-Eligible RDTOH was $17,445. On this date, the Company had nil balances in both its GRIP and its Eligible RDTOH. During the taxation year ending December 31, 2020, Medtech had Taxable Income of $456,250. The Part I Tax Payable for the year was correctly calculated to be $82,506. Net Income For Tax Purposes does not include any foreign source income. No net capital losses were deducted in determining Taxable Income. The Company's Net Income For Tax Purposes includes the following amounts of non-operating income: Capital Gains $87,460 Eligible Dividends From Canadian Public Companies 26,560 Net Rental Income From Residential Properties 14,760 Dividends From Connected Company (See Note 1) 77,700 Note 1 - These dividends, none of which were designated as eligible, were received from Medcare, another CCPC. Medtech owns 42 percent of this company's voting shares. As a consequence of paying this dividend, Medcare received a dividend refund of $20,386. Medtech is associated with four other companies. The annual business limit for the small business deduction is shared equally by Medtech and these companies. The $100,000 allocation is significantly less than the Company's active business income for 2020. Medtech Inc. paid taxable dividends of $66,560 during the year. It is the policy of the corporation to designate dividends as eligible only to the extent that a dividend refund will be available on their payment.

REQUIRED:

A. Determine Medtech's Part IV Tax Payable for 2020. B. Determine the refundable portion of Medtech's Part I Tax Payable for 2020. C. Determine the December 31, 2020 balances in Medtech's Eligible RDTOH and its Non-Eligible RDTOH. D. Determine Medtech's 2020 dividend refund, providing separate amounts for refunds on eligible dividends and refunds on non-eligible dividends.

Show all of the calculations used to provide the required information, including those for which the result is nil.

a. Part IV Tax Payable __________________________

b. Refundable Part I Tax ; Refundable Portion of Part I Tax ______________________________

c. Refundable Dividend Tax On Hand (ERDTOH & NERDTOH); ERDTOH Ending Balance ___________________________________ NERDTOH Ending Balance __________________________________

d. Dividend Refund ; Dividend Refund on Eligible Dividends _________________________ Dividend Refund on Non-Eligible Dividends ___________________________