Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Rob's Shameless Self-Promotion Sales (RSS-PS) Inc. is a Canadian-controlled private corporation located in London, Ontario. For its fiscal year ended December 31, 2019, the corporation

image text in transcribedimage text in transcribed
Rob's Shameless Self-Promotion Sales (RSS-PS) Inc. is a Canadian-controlled private corporation located in London, Ontario. For its fiscal year ended December 31, 2019, the corporation had correctly calculated its income for tax purposes under Division B as follows in Canadian dollar: Canadian source: Consulting income ...... $160,000 Advertising income US agency (withholding tax of $10,000) ................. 40,000 Rental income from warehouse fully rented on a five-year lease (Note 2)..... 20,000 Retailing income .... 75,000 Interest on outstanding accounts receivable in retailing business..... 25,000 Recapture of CCA from sale of fixtures used in retailing business..... 25,000 Interest income from five-year US bonds .......................... (Note 3) 75,000 Taxable capital gain (from active assets) ............. 70,000 Dividends from non-connected taxable Canadian corporations (eligible) (Note 4) ... 12,000 Division B net income for tax purposes $502,000 Note 1: Consulting income includes manufacturing processing profit of $100,000 computed under the ITAR 5200. Note 2: Rental income from warehouse fully rented on a five-year lease was $15,000 for 2018 Note 3: Withholding tax on Interest income from five-year US bonds for the current year is $7,000 and the interest income was $70,000 for 2018 Note 4: Dividends from non-connected taxable Canadian corporations (eligible) was $10,000 for 2018 Additional information: RSS-PS Inc. made the following selected payments during the year: Charitable donations ....... .. 14,000 Taxable non-eligible dividends.......... ...babezdramatist 120,000 total instalment paid 80,000The balances in the tax accounts on December 31, 2018 were: Charitable donations from 2016 $ 1,000 Non-capital losses from 2015 ..... 56,000 Net capital losses from 2015 .......4.4628645491481214:404 12,000 Non-eligible refundable dividend tax on hand ...... 20,000 Eligible refundable dividend tax on hand ..... Dividend refund (non-eligible) for 2018 ..........4:4:: 9,000 RSS-PS Inc. allocated none of its $500,000 business limit to other associated corporations. The only scientific research and experimental development expenditures of the associated group were made by RSS-PS Inc. Rob has asked you to: (A) Compute the federal Part I tax and assumed provincial tax at a 4% rate on active business income eligible for the small business deduction and 12% for all other income, and (B) Compute the dividend refund for 2019 and the amount of any RDTOH to be carried forward

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Principles Of Financial Accounting

Authors: Kermit Larson, John Wild

20th Edition

77338235, 978-0077619442

More Books

Students also viewed these Accounting questions

Question

Explain the concept of shear force and bending moment in beams.

Answered: 1 week ago

Question

6. How can hidden knowledge guide our actions?

Answered: 1 week ago