Corporate - Taxes Payable

Question 1

Corporate tax payable

Answer 1

Basic federal tax - 38% of taxable income

Less Federal tax abatement - 10% of taxable income

Less SBD 19% OR GRR 13%

Add 10.67% refundable Part I tax on investment income

Deduct:

• Federal refundable tax credits
• Taxes already paid

= Taxes payable/refundable

Question 2

AII

includes both cdn + foreign property income and TCGs

Answer 2

Property income

Net TCGs

AII incl in Div B

Less Div C deductions related to AII

Net cap loss CF

Dividends

= AII included in taxable income

Question 3

Net Cdn ABI

Answer 3

Net income for tax purposes Div B

Less: AII incl in net income

Less: Foreign business income

= Net Cdn ABI

Question 4

SBD

Answer 4

18% the lesser of

• ABI earned in Canada
• Taxable income less 100/28 * FTC on foreign non bus income , less (4 * FTC on foreign busi income
• Annual business limit (500,000)

Question 5

Annual limit is reduced for large CCPCs

(Has taxable capital employed in Canada greater than 10m)

125 (5.1)

Answer 5

500,000 * (B / 11,250)

B = taxable capital in excess of 10M

Question 6

GRR

13% of full rate taxable income

Answer 6

Full rate taxable income

Taxable income

Less: income eligible for SBD

Income eligible for M+p profits deduction

AII incl in taxable income

= full rate taxable income

* 13%

= GRR

Question 7

ART

Answer 7

10 2/3% lesser of

• AII incl in taxable income
• Taxable income - amt eligible for SBD

Question 8

Part IV tax

Answer 8

38 1/3% * dividends received from nonconnected taxable corps

+ investors share of a div refund received by a connected corp

Question 9

RDTOH balance

Answer 9

Op bal

less PY div refund received

+refundable portion of Part I tax

+Part IV tax

= RDTOH balance

Question 10

Refundable portion of Part I tax

Answer 10

lesser of

• (Taxable income - eligible for SBD) * 30 2/3%
• (AII in taxable income * 30 2/3%
• Part I federal tax

Question 11

Dividend refund out of RDTOH

lesser of

Answer 11

• 38 1/3% of taxable dividends paid
• RDTOH at end of year bef dividend refund

Question 12

GRIP balance

Answer 12

Beg GRIP

+(taxable income - SBD limit - AII taxable income ) * 72%

+eligible div from pubco

• eligible div paid in PY

= end GRIP

Question 13

Capital dividend account

Answer 13

• for private companies only
• 1/2 of capital gain accumulates in CDA
• once designated as a capital dividend, may be paid out on tax-free basis to shareholders