sol12-21 - Problem 12-21S SOLUTION (Past exam question: 45...

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SOLUTION (Past exam question: 45 minutes) Analysis of Net Income ABI PSB AII Divid _ Cdn. For. Cdn. For. Port. Conn. Manufacturing $150 Interest 3 1 6 Dividends TCG ____ ____ ____ 3 ____ ____ ____ ___ 153 4 6 1.5 6.5 = 171 Part A Part I Tax Payable Net income for income tax purposes $171,000 Division C deductions: Charitable donations (max. 75% × $171,000) ($2,000 + $5,000) $ 7,000 Dividends from taxable Canadian corporations 8,000 Net capital loss 1,500 16,500 Taxable income $154,500 Tax at 38% of $154,500 $ 58,710 Federal abatement @ 10% of $154,500 (15,450 ) Tax after abatement $ 43,260 Additional refundable tax is 6 % × the lesser of: (i) 6 % × AII ($3,000 - $1,500 +$1,000 + $6,000) 8,500 (ii) Taxable income- SBD income ($154,500 – 151,500) 3,000 6 × $3,000 200 Deduct: Small business deduction (Schedule 2) (25,755) Manufacturing and processing profits deduction (Schedule 3) Nil Tax reduction (Schedule 4) Nil $ 17,705 Less: Non-business foreign tax credit (Schedule 1) (900) Investment tax credit (Schedule 5) (16,805 ) Part I federal tax payable $ Nil Part IV Tax Payable : Dividends received from non-connected corps: $900 × $ 300 Dividends received from connected corp:
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This note was uploaded on 03/24/2012 for the course ACCOUNTING IAF841 taught by Professor Ganesh during the Spring '12 term at Seneca.

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sol12-21 - Problem 12-21S SOLUTION (Past exam question: 45...

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