Reference no: EM132425574

Question -

ABC Corporation ("ABC") is a Canadian-controlled private corporation and has correctly calculated its net income for tax purposes to be $857,000 for the year ending December 31, 2019, as shown below:

Business income $710,000

Taxable capital gains $80,000

Taxable dividends from Canadian public corporations $32,000

Taxable dividends from XYZ Inc. $5,000

Interest on five-year bonds $30,000

Net income for tax purposes $857,000

ABC owns 100% of the shares of XYZ. For the current year, XYZ claimed the small-business deduction on $80,000 of its active business income.

Additional information:

ABC made charitable donations of $45,000 during the year.

Net capital losses were $35,000 as of January 1, 2019.

Non-capital losses were $50,000 as of January 1, 2019.

At the end of the previous year, ABC had a balance in its non-eligible refundable dividend tax on hand (RDTOH) account of $18,000 and GRIP of $2,000. XYZ received a dividend refund of $1,917 from its non-eligible RDTOH when it paid its dividend of $5,000 to ABC.

ABC calculated a dividend refund of $3,000 for the previous year, based on dividends paid in the previous year.

Eligible dividends of $90,000 and capital dividends of $70,000 were paid by ABC on December 31, 2019. Dividends equal to the GRIP balance were designated as eligible dividends.

For 2018, the taxable capital of ABC and XYZ, combined, was below $10,000,000. As well, the combined adjusted aggregate investment income was below $50,000.

1. Determine ABC's federal income tax payable for its 2019 fiscal year.

2. Determine ABC's refundable dividend tax on hand balances at the end of 2019.

3. Determine ABC's dividend refund for 2019.