Question 8 60 pts Shred Holdings Ltd. is a Canadian controlled private corporation that sells ski and snowboard supplies and gondola lifts. It owns 70 percent of the outstanding shares of Freshpow Inc. On November 1, 2020, Freshpow Inc. declared and paid a non-eligible dividend of $21,000, of which Shred Holdings Ltd. received $14,700 (70 percent). As a result of paying the dividend, Freshpow Inc. received a dividend refund in the amount of $8,050. Other income that was reported by Shred Holdings consisted of the following amounts: Capital Gain $9,200 Eligible Dividends From Imperial Wax Common Shares 500 Interest 450 The capital gain was on the sale of land that was formerly used as a storage area for gondola inventories. Improved inventory control procedures have eliminated the need for this land. The interest is on deposits of temporary cash balances set aside for the purchase of inventories. On January 1, 2020, Shred had a Non-Eligible RDTOH balance of $4,950. There was no balance in either the Eligible RDTOH or the GRIP account on this date. At the end of 2019, the Company's Refundable Dividend Tax On Hand balance was $8,950. The 2019 dividend refund was $4,000. There was no December 31, 2019 balance in the corporation's GRIP The Company's Taxable income for the year ending December 31, 2020 was $44,000. No foreign income was included in this total. Assume the Part I Tax Payable for the year ending December 31, 2020 was correctly calculated as $9,250. Because of its association with Freshpow Inc., its share of the annual business limit on income eligible for the small business deduction is $10,000. As Shred's active business income is greater than $10,000, the amount of income that is eligible for small business deduction is equal to $10,000. Shred Holdings paid taxable dividends of $10,000 during 2020. The corporation's policy is to designate dividends as eligible only to the extent that a refund is available on their payment. For 2019, Shred and Freshpow had combined ADJUSTED Aggregate Investment Income of $32,485. Their Taxable Capital Employed In Canada totaled $6,426,000 for 2019. Required: Show all of the calculations used to provide the required information, including those for which the result is nil. For the taxation year ending December 31, 2020, calculate the following items for Shred Holdings: 1. Refundable Part I Tax. 2. Part IV Tax Payable. 3. The December 31, 2020 GRIP balance. 4. The balance in the Eligible RDTOH and the balance in the Non-Eligible RDTOH on December 31, 2020. 5. The dividend refund, showing separately refunds on eligible and non-eligible dividends. Provide an explanation of how the dividend allocations were determined and please include a conclusion of the final dividend allocation between eligible and non-eligible. PLEASE REMEMBER TO SAVE YOUR WORK, AND MAKE SURE YOU UPLOAD TO CANVAS BEFORE YOUR TIMER RUNS OUT! Upload Choose a File Question 8 60 pts Shred Holdings Ltd. is a Canadian controlled private corporation that sells ski and snowboard supplies and gondola lifts. It owns 70 percent of the outstanding shares of Freshpow Inc. On November 1, 2020, Freshpow Inc. declared and paid a non-eligible dividend of $21,000, of which Shred Holdings Ltd. received $14,700 (70 percent). As a result of paying the dividend, Freshpow Inc. received a dividend refund in the amount of $8,050. Other income that was reported by Shred Holdings consisted of the following amounts: Capital Gain $9,200 Eligible Dividends From Imperial Wax Common Shares 500 Interest 450 The capital gain was on the sale of land that was formerly used as a storage area for gondola inventories. Improved inventory control procedures have eliminated the need for this land. The interest is on deposits of temporary cash balances set aside for the purchase of inventories. On January 1, 2020, Shred had a Non-Eligible RDTOH balance of $4,950. There was no balance in either the Eligible RDTOH or the GRIP account on this date. At the end of 2019, the Company's Refundable Dividend Tax On Hand balance was $8,950. The 2019 dividend refund was $4,000. There was no December 31, 2019 balance in the corporation's GRIP The Company's Taxable income for the year ending December 31, 2020 was $44,000. No foreign income was included in this total. Assume the Part I Tax Payable for the year ending December 31, 2020 was correctly calculated as $9,250. Because of its association with Freshpow Inc., its share of the annual business limit on income eligible for the small business deduction is $10,000. As Shred's active business income is greater than $10,000, the amount of income that is eligible for small business deduction is equal to $10,000. Shred Holdings paid taxable dividends of $10,000 during 2020. The corporation's policy is to designate dividends as eligible only to the extent that a refund is available on their payment. For 2019, Shred and Freshpow had combined ADJUSTED Aggregate Investment Income of $32,485. Their Taxable Capital Employed In Canada totaled $6,426,000 for 2019. Required: Show all of the calculations used to provide the required information, including those for which the result is nil. For the taxation year ending December 31, 2020, calculate the following items for Shred Holdings: 1. Refundable Part I Tax. 2. Part IV Tax Payable. 3. The December 31, 2020 GRIP balance. 4. The balance in the Eligible RDTOH and the balance in the Non-Eligible RDTOH on December 31, 2020. 5. The dividend refund, showing separately refunds on eligible and non-eligible dividends. Provide an explanation of how the dividend allocations were determined and please include a conclusion of the final dividend allocation between eligible and non-eligible. PLEASE REMEMBER TO SAVE YOUR WORK, AND MAKE SURE YOU UPLOAD TO CANVAS BEFORE YOUR TIMER RUNS OUT! Upload Choose a File