Question 2

Hidden Inc., a CCPC, has a year-end of December 31, 2020. Its Net Income for the year was $304,000. After a discussion with the controller you noted a few points:

• Included in their income statement was:
  • A $10,000 inventory reserve was deducted to account for a potential decline in value.
  • Salaries and wages were $134,000 for the year.
  • Legal fees were $74,000 for the year. This includes $1,200 paid to appeal an income tax assessment.
  • Finance expense contained $1,000 of interest on late income tax installments.
  • A warranty provision of $3,500 was taken during the year based on the most likely cost of fixing the most likely % of units that will be returned. No units were returned yet to be fixed under warranty.
  • Amortization for the year was $45,000. They estimate total CCA will be approximately $50,000.
  • Dividends from various Canadian public companies of $29,500 were included in the income. This is not active business income.
  • Charitable donations totaled $21,000.
• Hidden Inc. has a non-capital loss carry forward of $21,400 that they intend to use in 2020.
• Hidden Inc is associated with one other CCPC. Both companies agreed that each would claim 50% of the small business deduction annual limit.

Required:

1. Calculate the minimum Part I Federal Tax Payable. Show all calculations whether or not they are needed to arrive at the final solution.