Question

In: Accounting

PROVINCIAL INCOME ALLOCATION (12 Marks) WGH Operations LTD. (WHG) has permanent establishments in 4 Canadian provinces....

PROVINCIAL INCOME ALLOCATION

WGH Operations LTD. (WHG) has permanent establishments in 4 Canadian provinces.

The breakdown of the revenues and the salaries attributable to each permanent establishment is as follows:

                          

Gross Revenue for WGH

Salaries and wages for WGH

Alberta

$3,000,000

        Alberta

$250,000

Saskatchewan

$20,000,000

     Saskatchewan

$450,000

Manitoba

$37,000,000

        Manitoba

$300,000

Ontario

$55,000,000

       Ontario

$1,000,000

Canada -- Total

$115,000,000

       Canada-- Total

$2,000,000

WGH had Taxable Income of $25,000,000 in 2019.

REQUIRED:   Determine the amount of Taxable Income to allocate to each province.

Solutions

Expert Solution

Gross Revenue Gross Wages Net Revenue Proportionate share of each province
Alberta 30,00,000 2,50,000 27,50,000                        2.43
Saskatchewan 200,00,000 4,50,000 195,50,000                      17.30
Manitoba 370,00,000 3,00,000 367,00,000                      32.48
Ontario 550,00,000 10,00,000 540,00,000                      47.79
Canada -- Total 1150,00,000 20,00,000 1130,00,000 100
WGH Taxable income for 2019                    250,00,000
Allocation of taxable income Taxable income
Alberta 25000000*2.43%                         6,08,407
Saskatchewan 25000000*17.3%                       43,25,221
Manitoba 25000000*32.48%                       81,19,469
Ontario 25000000*47.79%                    119,46,903

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