taxation

Assignment Problem Thirteen - 6 Oland Ltd. is a Canadian controlled private corporation with a December 31 year end. For the (Comprehensive Corporate Tax Payable With CCA) year ending December 31, 2019, the Income Statement of the Company, prepared in accor dance with generally accepted accounting principles, is as follows: $1,625,986 (5776,257) ( 394,672) (125,489) 27.000) Revenues Expenses: Cost Of Goods Sold Selling And Administrative Costs Amortization Expense Charitable Donations Operating Income Gain On Sale Of Property Loss On Sale Of Vehicles Gain On Sale Of Investments Dividends Received (See Note) Net Income Before Taxes (1,323,418) $ 302,568 $153,600 55,000) 11,000 123,400 233,000 5 535,568 Note The components of the dividends received are as follows: Eligible Dividends From Canadian Public Companies 5 62,300 Non-Eligible Dividends From 80 Percent Owned Subsidiary (The Subsidiary Received A Dividend Refund Of $15,000 From Its Non-Eligible RDTOH) 48,000 Non-Eligible Dividends From Wholly Owned Subsidiary (No Dividend Refund) 13,100 Total Dividends Received 5123,400 Oland is associated with both of these companies. The two subsidiaries have each been allocated $125,000 of the small business deduction's annual business limit. The remaining $250,000 has been allocated to Oland. Other Information: 1. Selling And Administrative Costs include 522.490 in business meals and entertainment. 2. Selling and Administrative Costs includes interest on late income tax instalments of $1,240 and on late municipal tax payments of 5625. 3. Selling And Administrative Costs includes bond discount amortization of $3,850. 4. During 2019, Oland Ltd. acquired a competing business at a price that included goodwill of $110,400. For accounting purposes, there is no impairment or write-down of the good- will in 2019. 5. Selling And Administrative Costs include membership fees for several employees in a local golf and country club. These fees total $7,285. 6. As the Company expects to issue more shares during 2019, it made a number of amend- ments to its articles of incorporation and included the legal costs in Selling And Administrative Costs. These costs totalled 511,482. 7. On January 1, 2019, the Company had the following UCC balances: Class 1 $582,652 575,267 75,348 Class 13 88,600 Class 14.1 The Class 1 balance relates to a single real property acquired in 2000 at a cost of $750,000. It is estimated that the value of the land at this time was $50,000. On February 1. 2019, this property is sold for 5850,000. It is estimated that at this time, the value of the land has increased to $80,000. In the accounting records, this real property was carried at $696,400, $646,400 for the building and $50,000 for the land, Class 8 Class 10 Nil Assignment Problems The old building is replaced on February 15, 2019 with a new building acquired at a cost of 5923,000 of which 586,000 is allocated to land. As the building is used more than percent for non-residential purposes, it qualifies for the special 6 percent CCA rate 1 order to use this rate, the building is put into a separate CCA class. No elections are made with respect to the replacement of the building. During 2019. Class 8 assets were acquired at a cost of $226,000. Class 8 assets with a Canadian artists and each was sold for an amount in excess of its cost. The accountant had not amortized them for accounting purposes as he could not determine an estimated useful life. Class 8 contains a large number of assets at the end of 2019. As the Company has decided to lease all of its vehicles in the future, all of the assets in Class 10 are sold during the year. The capital cost of these assets was $142,000 and the proceeds of disposition amounted to 543,000. The net book value of these assets was $98,000. The Class 13 balance relates to a single lease that commenced on January 1, 2014. The lease has an initial term of seven years, with two successive options to renew for three years each. At the inception of the lease, the Company spent $110,000 on leasehold improvements. On January 1, 2016, an additional 544,800 was spent on further improvements. 8. It is Oland's policy to deduct maximum amounts of CCA. 9. During 2019, Oland spends 518,500 landscaping the grounds of its new building. For accounting purposes this was treated as an asset. However, the Company will not amor tize this balance as it believes the work has an unlimited life. 10. Investments were sold during the year for $126,000. The adjusted cost base of these investments was $115,000. 11. On December 31, 2018, the Company had a balance in its Refundable Dividend Tax On Hand account of $52,460. The Company claimed a dividend refund of $12.800 in its 2018 corporate tax return. 12. At the end of 2018, Oland has a GRIP balance of $162,345. During 2018, the Company designated $12,350 of its dividends paid as eligible. 13. During 2019, Oland paid $42, 300 in dividends. Of this total, 526,300 were designated as eligible. 14. At the beginning of 2019, Oland had a $23,000 net capital loss carry forward f(1/2)(546,000)). It also had a non-capital loss carry forward of $36,400. The Company would like to deduct as much as possible of these two carry overs during 2019. 15. All of Oland's Taxable income will be allocated to a province. 16. It has been determined that Oland has $300,289 of active business income of this total $43,000 results from manufacturing and processing activity. Because of special caterie the province in which it operates, Oland makes a separate calculation of the manufac turing and processing deduction 17. For 2018, Oland and its associated companies had combined ADJUSTED Aggress Investment Income of $48,900. Their Taxable Capital Employed In Canada totalled $8,900,000 for 2018. Required: Show all of the calculations used to provide the following required information including those for which the nil. A. Determine Oland's minimum Net Income For Tax Purposes and Taxable income for the balance for each CCA class. year ending December 31, 2019. Include in your solution the January 1, 2020 UCC B. Determine Oland's Part I Tax Payable for the year ending December 31, 2019. c. Determine the refundable portion of Oland's Part 1 Tax Payable for 2019. D. Determine Oland's Part IV Tax Payable for the 2019. E. Determine the December 31, 2019 balance in Oland's GRIP. # Determine the December 31, 2019 balances in Oland's Eligible RDTOH and Non-Eligible G. Determine Oland's dividend refund for 2019, separately identifying the refund related to eligible dividends and the refund related to non-eligible dividends. H. Determine Oland's net federal Tax Payable for 2019. RDTOH. Assignment Problem Thirteen - 6 Oland Ltd. is a Canadian controlled private corporation with a December 31 year end. For the (Comprehensive Corporate Tax Payable With CCA) year ending December 31, 2019, the Income Statement of the Company, prepared in accor dance with generally accepted accounting principles, is as follows: $1,625,986 (5776,257) ( 394,672) (125,489) 27.000) Revenues Expenses: Cost Of Goods Sold Selling And Administrative Costs Amortization Expense Charitable Donations Operating Income Gain On Sale Of Property Loss On Sale Of Vehicles Gain On Sale Of Investments Dividends Received (See Note) Net Income Before Taxes (1,323,418) $ 302,568 $153,600 55,000) 11,000 123,400 233,000 5 535,568 Note The components of the dividends received are as follows: Eligible Dividends From Canadian Public Companies 5 62,300 Non-Eligible Dividends From 80 Percent Owned Subsidiary (The Subsidiary Received A Dividend Refund Of $15,000 From Its Non-Eligible RDTOH) 48,000 Non-Eligible Dividends From Wholly Owned Subsidiary (No Dividend Refund) 13,100 Total Dividends Received 5123,400 Oland is associated with both of these companies. The two subsidiaries have each been allocated $125,000 of the small business deduction's annual business limit. The remaining $250,000 has been allocated to Oland. Other Information: 1. Selling And Administrative Costs include 522.490 in business meals and entertainment. 2. Selling and Administrative Costs includes interest on late income tax instalments of $1,240 and on late municipal tax payments of 5625. 3. Selling And Administrative Costs includes bond discount amortization of $3,850. 4. During 2019, Oland Ltd. acquired a competing business at a price that included goodwill of $110,400. For accounting purposes, there is no impairment or write-down of the good- will in 2019. 5. Selling And Administrative Costs include membership fees for several employees in a local golf and country club. These fees total $7,285. 6. As the Company expects to issue more shares during 2019, it made a number of amend- ments to its articles of incorporation and included the legal costs in Selling And Administrative Costs. These costs totalled 511,482. 7. On January 1, 2019, the Company had the following UCC balances: Class 1 $582,652 575,267 75,348 Class 13 88,600 Class 14.1 The Class 1 balance relates to a single real property acquired in 2000 at a cost of $750,000. It is estimated that the value of the land at this time was $50,000. On February 1. 2019, this property is sold for 5850,000. It is estimated that at this time, the value of the land has increased to $80,000. In the accounting records, this real property was carried at $696,400, $646,400 for the building and $50,000 for the land, Class 8 Class 10 Nil Assignment Problems The old building is replaced on February 15, 2019 with a new building acquired at a cost of 5923,000 of which 586,000 is allocated to land. As the building is used more than percent for non-residential purposes, it qualifies for the special 6 percent CCA rate 1 order to use this rate, the building is put into a separate CCA class. No elections are made with respect to the replacement of the building. During 2019. Class 8 assets were acquired at a cost of $226,000. Class 8 assets with a Canadian artists and each was sold for an amount in excess of its cost. The accountant had not amortized them for accounting purposes as he could not determine an estimated useful life. Class 8 contains a large number of assets at the end of 2019. As the Company has decided to lease all of its vehicles in the future, all of the assets in Class 10 are sold during the year. The capital cost of these assets was $142,000 and the proceeds of disposition amounted to 543,000. The net book value of these assets was $98,000. The Class 13 balance relates to a single lease that commenced on January 1, 2014. The lease has an initial term of seven years, with two successive options to renew for three years each. At the inception of the lease, the Company spent $110,000 on leasehold improvements. On January 1, 2016, an additional 544,800 was spent on further improvements. 8. It is Oland's policy to deduct maximum amounts of CCA. 9. During 2019, Oland spends 518,500 landscaping the grounds of its new building. For accounting purposes this was treated as an asset. However, the Company will not amor tize this balance as it believes the work has an unlimited life. 10. Investments were sold during the year for $126,000. The adjusted cost base of these investments was $115,000. 11. On December 31, 2018, the Company had a balance in its Refundable Dividend Tax On Hand account of $52,460. The Company claimed a dividend refund of $12.800 in its 2018 corporate tax return. 12. At the end of 2018, Oland has a GRIP balance of $162,345. During 2018, the Company designated $12,350 of its dividends paid as eligible. 13. During 2019, Oland paid $42, 300 in dividends. Of this total, 526,300 were designated as eligible. 14. At the beginning of 2019, Oland had a $23,000 net capital loss carry forward f(1/2)(546,000)). It also had a non-capital loss carry forward of $36,400. The Company would like to deduct as much as possible of these two carry overs during 2019. 15. All of Oland's Taxable income will be allocated to a province. 16. It has been determined that Oland has $300,289 of active business income of this total $43,000 results from manufacturing and processing activity. Because of special caterie the province in which it operates, Oland makes a separate calculation of the manufac turing and processing deduction 17. For 2018, Oland and its associated companies had combined ADJUSTED Aggress Investment Income of $48,900. Their Taxable Capital Employed In Canada totalled $8,900,000 for 2018. Required: Show all of the calculations used to provide the following required information including those for which the nil. A. Determine Oland's minimum Net Income For Tax Purposes and Taxable income for the balance for each CCA class. year ending December 31, 2019. Include in your solution the January 1, 2020 UCC B. Determine Oland's Part I Tax Payable for the year ending December 31, 2019. c. Determine the refundable portion of Oland's Part 1 Tax Payable for 2019. D. Determine Oland's Part IV Tax Payable for the 2019. E. Determine the December 31, 2019 balance in Oland's GRIP. # Determine the December 31, 2019 balances in Oland's Eligible RDTOH and Non-Eligible G. Determine Oland's dividend refund for 2019, separately identifying the refund related to eligible dividends and the refund related to non-eligible dividends. H. Determine Oland's net federal Tax Payable for 2019. RDTOH