Problem

As Director of Taxation of Verblonget Ltd., a Canadian controlled private corporation, you are responsible for ensuring that corporate income tax instalments are correctly calculated and paid on time. The corporation has a December 31 year-end and operates only in Canada. In 2017, the corporation paid $33,000 in income tax on $150,000 of active business income. In 2018, it paid $40,000 on $180,000 of active business income. At the beginning of 2019, you expected active business income to be $185,000, and this would result in income tax of $42,000 for the year.The company doesn't have a "perfect compliance history".

Required to solve:

(a)By showing your calculations for all of the options, indicate

• the minimum amount that should be paid in instalments for 2019, and
• the specific dates on which these instalments must be paid.

(b)Assume that your estimate of the income tax for 2019 was inaccurate because the actual income tax amount turns out to be $45,000 for 2019. Also, assume that the corporation paid the minimum required instalments computed in (a) on time. How much is the balance due and on what specific date must it be paid?

(c)Assume that, at the end of November, the corporation paid no instalments for November and December. Also, assume that the corporation pays the full amount owing on the balance-due date. How much interest is payable on that date, if the prescribed rate for the the second two quarters of 2019 is 4% and for all of 2020 is 3%? What is the owing amount due on that date?

(d)If the CRA issues a Notice of Assessment for the 2019 corporate tax return on September 10, 2020, and the interest on the deficient instalments was incorrectly calculated by the CRA, what is the specific date deadline for filing a Notice of Objection?

(e)What is the specific date deadline for the CRA to issue a Notice of Reassessment for the 2019 corporate return?