The controller of Above All Inc. (AA Inc.) provided you with the following selected information related to the 2020 taxation year ended December 31, 2020. AA Inc. is a Canadian-controlled private corporation. AA Inc. did not have taxable capital in excess of $10,000,000 in 2019.

Canadian manufacturing profits $451,500

Canadian retail business income 50,000

Taxable capital gains(non-active) 4,500

Interest income:

Canadian long-term bonds 40,000

Interest on overdue accounts receivable 5,000

Dividend income:

From taxable Canadian corporations(eligible dividend)

(AA owns less than 5% of the shares of these corporations) 9,000

From U.S. corporations (before U.S. tax of $1,800)

(these corporations are not foreign affiliates) 12,000

Non capital losses from prior years applied in the calculation of taxable income 55,000

Net capital losses from prior years applied in the calculation of taxable income 4,500

Calculations correctly prepared under the Income Tax Act

Taxable income $503,500

Part I tax payable (including additional refundable tax) 66,682

Foreign non-business tax credit 1,800

Miscellaneous Items

Refundable dividend tax on hand as of December 31, 2019 (non-eligible) $20,000

Dividend refund received in respect of the 2019 taxation year (non-eligible) 9,000

Taxable dividends paid during 2020 (non-eligible) 120,000

Required:

Determine, for AA Inc., by clearly presenting all component parts and their calculations,

1. the amount of the small business deduction, and

(b) the amount of the dividend refund for 2020.

Do not re-compute the Part I tax and the other related tax credits. Assume that they have been computed correctly.

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