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 companys first venture into manufacturing.

Selected financial information for the companys current fiscal period is presented below.

1.

	Head office	Alberta branch
Canadian sales	$7,700,000	$1,430,000
Foreign sales	770,000	0
Cost of sales	5,082,000	1,001,000
Salaries and wages	1,320,000	220,000
Profit from operations	1,320,000	11,000
Dividend income	88,000	0
Taxable capital gains	77,000	0

2. At the end of the previous year, the company had net capital losses of $ 99,000 and non-capital losses of $ 132,000 that were available for carry-forward.

3. The Alberta branch location includes a building and equipment. The companys accountant is in the process of determining the corporations tax liability and indicates that the annualized cost of manufacturing capital employed in the Alberta branch is $200,000 and that the corporations 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