U.P.I. Industries Ltd., a Canadian corporation with a head office in Nova Scotia, has recently been designated a public corporation. Its shares are traded on the TSX Venture Exchange. Over the past year, the company has pursued an aggressive expansion policy. Sales personnel based at head office have travelled to North Dakota and Minnesota and have achieved moderate success in developing new customers in the United States. In addition, the company has opened a branch location in Alberta by establishing an office and manufacturing plant staffed by new Alberta personnel. The Alberta manufacturing plant is the company's first venture into manufacturing.

Selected financial information for the company's current fiscal period is presented below.

1.

Head office Alberta branch

Canadian sales $8,470,000 $1,573,000

Foreign sales 800,000 -0-

Cost of sales 5,590,200 1,101,100

Salaries and wages 1,452,000 242,000

Profit from operations 1,452,000 12,100

Dividend income 96,800 -0-

Taxable capital gains 84,700 -0-

2.At the end of the previous year, the company had net capital losses of $ 108,900 and non-capital losses of $ 145,200that were available for carry-forward.

3.The Alberta branch location includes a building and equipment. The company's accountant is in the process of determining the corporation's tax liability and indicates that the annualized cost of manufacturing capital employed in the Alberta branch is $200,000 and that the corporation's total annualized cost of tangible property used amounts to $800,000. The accountant also indicates that the manufacturing labour in the Alberta branch amounts to $120,000. This amount has been calculated in accordance with the income tax rules for determining manufacturing labour.

4.The assumed provincial corporate income tax rate is 16% in Nova Scotia and 12% in Alberta .

Required:

1.For the current year, determine U.P.I.'s

(a) net income for tax purposes;

(b) taxable income; and

(c) federal and provincial tax liabilities.

Required: 1. For the current year, determine U.P.I.'s (a) net income for tax purposes; (b) taxable income; and (c) federal and provincial tax liabilities. Profit Net Income for tax purposes Taxable income Net Income for tax purposes Taxable Income Allocate Income between Head office and Branch Taxable Income for Head Office - Nova Scotia Taxable Income for Alberta Total Taxable IncomeFederal Taxes Federal Basic tax Abatement General tax reduction Net Federal Tax Provincial Taxes Head Office - Nova Scotia Branch - Alberta Total Federal and Provincial Taxes