Valley View Ltd. is a Canadian-controlled private corporation that sells farm supplies.  It owns 70% of the outstanding shares of Lindeman Inc. On October 1, 2020, Lindeman Inc. declared and paid a non-eligible dividend of $31,000, of which Valley View Ltd. received $21,700 (70%).  As a result of paying the dividend, Lindeman Inc. received a dividend refund in the amount of $11,780.

Other income that was reported by Valley View Ltd. consisted of the following amounts:

Capital Gain                                                                        $9,200

Eligible Dividends From Telus Common Shares                900

Interest                                                                                     450

 

Valley View's December 31, 2019 GRIP balance was $2,500.

On January 1, 2020, the Eligible RDTOH balance is $1,100 and Non-eligible RDTOH balance is $4,950.

The Company’s Taxable Income for the year ending December 31, 2020 was $44,000. No foreign income was included in this total.

Assume the Part I Tax Payable for the year ending December 31, 2020 was correctly calculated as $13,000 (so you don’t need to calculate the Part I Tax Payable).

Because of its association with Lindeman Inc., its share of the annual business limit on income eligible for the small business deduction is $10,000.  As Valley View’s active business income is greater than $10,000, the amount of income that is eligible for small business deduction is equal to $10,000.

Valley View paid taxable dividends of $28,000 during 2020. The corporation’s policy is to designate dividends as eligible only to the extent that a refund is available on their payment.

For 2019, Valley View and Lindeman had combined ADJUSTED Aggregate Investment Income of $32,485.  Their Taxable Capital Employed In Canada totalled $6,426,000 for 2019.

 

Required: For the taxation year ending December 31, 2020, calculate the following items for Valley View:

A.  Refundable Part I Tax

B.  Part IV Tax Payable

C.  The December 31, 2020 GRIP balance

D.  The balance in the Eligible RDTOH and the balance in the Non-Eligible RDTOH on December 31, 2020

E.  The dividend refund, showing separately refunds on eligible and non-eligible dividends.