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Schumann Inc. is a CCPC that has the following information for the current year: Canadian active...

Schumann Inc. is a CCPC that has the following information for the current year:

Canadian active business income                 $140,000

Dividend from a taxable Canadian corporation 15,000

Aggregate investment income                           60,000

Taxable income                                              200,000

Income eligible for the small business deduction 140,000

Part I tax payable for the year                           21,900

The refundable portion of Part I tax for the year is equal to:

A. $5,750.

B. $18,400.

C. $24,150.

D. $21,900.

Solutions

Expert Solution

The refundable portion of Part I tax for the year is equal to ( B. $18,400. ).

given,

Canadian active business income                 $140,000

Dividend from a taxable Canadian corporation 15,000

Aggregate investment income                           60,000

Taxable income                                              200,000

Income eligible for the small business deduction 140,000

Part I tax payable for the year                           21,900

The refundable portion of Part I tax for the year is following:

Refundable Portion of Part I Tax is the lesser of,

  1. 30 2/3% * Aggregate Investment Income (AII)
  2. 30 2/3 * (Taxable Income – Amount Eligible for the SBD)
  3. Part I Tax

Aggregate investment income X 30 2/3% = 60,000 X 30 2/3%

                                             =   $ 18400

Taxable income - Income eligible for the small business deduction =

    =200000-140000

   = 60000 X 30 2/3%= 18400

Lessser of Part I tax payable for the year                           21,900

ekkarill92 answered 2 years ago
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