Question 13.1.7 Question Help Canteen World Inc. is a Canadian controlled private corporation (CCPC) that operates a retail business selling cooking utensils, knives, and small appliances for both professional chefs and home cooks. Canteen World Inc. is operated out of Edmonton, Alberta, and all of the corporation's revenue and expenses are incurred in Alberta. (Click on the icon to view the financial information.) (Click on the icon to view the additional information.) Financial Information Additional Information - X arest cent.) Canteen World Inc. December 31 3(a) Positive Sources of Income Canadian Source Interest Income $ 24,350.00 626,750.00 Net Business Income $ Canadian Source Dividend Income $ 96,500.00 $ 53,500.00 1. Canteen World Inc.'s business income is a result of retail sales operations and, therefore, does not partake in any manufacturing or processing activities and does not qualify for the Manufacturing and Processing Profits Deduction. 2. Canteen World Inc. owns 100% of the outstanding shares of Steakhouse Holdings Ltd.; therefore, these two corporations are associated for tax purposes in current taxation year. Steakhouse Holdings Ltd. does not earn active business income; therefore, it does not require any of the small business deduction limit. Therefore, Canteen World Inc. is able to utilize the full amount of the annual limit for purposes of calculating the small business deduction. 3. For simplicity purposes, assume that the corporation's net business income (provided above) is considered active business income for purposes of the small business deduction. 4. The taxable capital gains in the year were incurred on the disposition of vehicles and office furniture utilized in the active business of Canteen World Inc. 5. Canteen World Inc. had a closing Eligible RDTOH balance from the previous year of $35,000. Canteen World Inc. had a closing Non-Eligible RDTOH balance from the previous year of $50,000. The corporation received a dividend refund from the Non-Eligible RDTOH account in the previous year of $22,000 and a dividend refund from the Eligible RDTOH account in the previous year of $10,733.33. 6. The Canadian source dividend income included in the corporation's net income is comprised of the following. Ineligible dividends received from Steakhouse Holdings Ltd. of $64,000 (As a result of paying this dividend, the wholly owned subsidiary received a dividend refund of $22,000.) Eligible dividends received from unconnected corporations, whose shares are owned by Canteen World Inc. in its portfolio of investments of $32,500 7. Canteen World Inc. had a GRIP balance at the end of the previous taxation year of $24.425; in the previous year, the corporation designated a portion of the dividends declared as eligible in the amount of $28,000. 8. Canteen World Inc. has paid the following taxable dividends during the current year. Eligible dividends of $54,000 Ineligible dividends of $28,000 $ 801,100.00 3(b) Net Taxable Gains Taxable Capital Gains Net Income for Tax Purposes Less Division "C" deductions: Dividends from Taxable Canadian Corporations Net Capital Loss Carryover from Previous Year $ (96,500.00) $ (24,500.00 $ 680,100.00 Taxable income Print Done Required 1. Calculate the amount of Federal Taxes Payable under Part 1 of the Income Tax Act for Canteen World Inc. 2. Determine the amount of Part IV Tax Payable by Canteen World Inc. 3. Compute the closing RDTOH balances for Canteen World Inc. for the year ended December 31. 4. Has the corporation maximized its dividend refund in the current year? Why or why not? 5. Canteen World Inc. is in need of additional financing in order to expand operations and is considering an initial public offering (IPO) of shares on the Toronto Stock Exchange to meet its financing needs. If Canteen World Inc. becomes a public company in the future, how will this impact its RDTOH balance? What tax planning advice can you provide to the corporation with regard to maximizing its dividend refund prior to going public? 6. Define GRIP and LRIP. 7. Determine the GRIP balance at the end of the current year for Canteen World Inc. The shareholders of Canteen World Inc. prefer to receive eligible dividends rather than ineligible dividends. Is there any tax planning advice you can provide to the shareholders of Canteen World Inc. that would allow the corporation to designate all of the corporation's dividends as eligible