Taylor Enterprises Ltd. is a Canadian controlled private corporation that provides retirement consulting services. As a result of your conversation with the president of the company, Phil Taylor, you have agreed to prepare corporate T2 return for Taylor Enterprises Ltd. Here is the information that Taylor has provided:

Taylor Enterprises Ltd.

The Taylor family have owned and operated Taylor Enterprises Ltd. for years. The business is located in Alberta. Its head office is located at 45 First Street, Calgary AB T3V 6P1, phone number (403) 555 5555. Phil is the signing officer and contact person. The company was incorporated on August 1, 1978.As at December 31, company's taxable capital is $540,000.

As of December 31, the company's profit and loss accounts had following balances:

Sales revenues (GIFI code 8000 under Revenue)........................................................ $284,000

Interest from bonds (GIFI code 8092 under Revenue)................................................. 9,000

Rental income* (GIFI code 8140 under Revenue)....................................................... 14,000

Interest on A/R (GIFI code 8094 under Revenue)....................................................... 5,000

Dividends (GIFI code 8096 under Revenue)................................................................ 31,000

Gain on sale of capital assets (GIFI code 8210 under Revenue) ................................. 22,000

Operating expenses (GIFI code 9270 under Operating Expenses).............................. 53,000

Depreciation (GIFI code 8670 under Operating Expenses)......................................... 15,000

Donations (GIFI code 8522 under Operating Expenses)............................................. 26,000

Net Income................................................................................................................... $271,000

*This income from rental of an apartment building (no full-time employees and tenants provide all of their own services). [In ProFile, in addition to GIFI, enter rental income to "S7RENTAL: Statement of rental income" schedule.]

Company's Balance Sheet had following balances:

Assets:

Cash.............................................................................................................................. $20,000

Furniture and Fixtures.................................................................................................. 50,000

Land.............................................................................................................................. 470,000

Liabilities and Equity:

Bank loan payable (GIFI code 2701)........................................................................... $120,000

Common Shares............................................................................................................ 1,000

Retained Earnings*....................................................................................................... 419,000

*Company paid $72,000 in dividends during the year to individual shareholders. Enter this information under Retained earnings section, GIFI code 3701.

Other Information:

Donations were made to the Cancer Research Society.

Dividends were received from taxable corporations:

a)connected corporation, non-eligible dividend payment triggering a dividend

refund of $2,750 to the wholly owned subsidiary...................................... 11,000

b)non-connected corporation (portfolio dividends)....................................... 20,000

The company has available a non-capital loss carryover from the previous year of $10,000. The net capital loss carry forward from 2012 is $7,000.

The opening UCC balance in Class 8 pool was $55,000. The company did not purchase or dispose of any Class 8 asset during the year.

The gain on sale of capital assets resulted from the sale of land and an apartment building for proceeds of $367,000 of which $100,000 was allocated to building. The land and building at 47 First Street, Calgary AB T3V 6P1 were acquired on July 1, 2016 for 333,000, of which $90,000 was allocated to building. As the company leases all of its other buildings and equipment, the building was the only asset in class 1. The UCC of this class prior to the disposition of the building was $86,000.

It has been agreed that $200,000 of the business limit for small business deduction will be claimed by Taylor Enterprises Ltd., leaving the remainder for the associated corporation, Multi Versa Enterprises Ltd. [In ProFile, fill out "RACDETAILS: Related and associated corporation details" schedule (fill out information where appropriate and enter 60 as a % of business limit that is available to Taylor Enterprises Ltd). Fill out "S23: Associated CCPCs - business limit allocation" (enter Association code 1).]

Notes: for business number, type NR in the business number box on the T2 return.

Required:

Part A (23 marks)

In Excel, calculate the federal Part I tax. Compute the refundable dividend tax on hand balance, showing in detail, your calculations and compute the dividend refund for Taylor Enterprises Ltd.

Part B (3 marks)

Using information provided to you, complete the corporate T2 return for Taylor Enterprises Ltd.