Comprehensive Canadian Tax Assignment for XYZ Company - 2018

This Canadian tax assignment focuses on calculating the taxable income and tax liability for XYZ Company for the 2018 tax year. The assignment details various income sources, including income from operations, dividend income, and rental income, as well as capital gains. It outlines the deductions, such as donations, CCA on different assets, and losses from property. The solution includes working notes for depreciation calculations and detailed computations for federal income tax, including federal abatement, SBD, and losses. Furthermore, the assignment covers Part IV tax, RDTOH calculation, dividend refund calculation, and the capital dividend account balance. The final calculations determine the minimum taxable income, federal income tax, and other relevant tax components.

Running head: CANADIAN TAX ASSIGNMENT
Canadian Tax Assignment
Name of the Student:
Name of the University:
Authors Note:

1
CANADIAN TAX ASSIGNMENT
Contents
Section D:........................................................................................................................................2
References:......................................................................................................................................9

2
CANADIAN TAX ASSIGNMENT
Section D:
Part DI:
Section D
DI
Particulars Amount ($) Amount ($) Amount ($)
Income from operations 238,000.00
Dividend income 15,000.00
Rental income 25,000.00
Capital gain on sale of furniture (Note I) 9,691.58
Capital gain on sale of land on accrual basis (75000 -
50000)
25,000.00
Life insurance premium on CEO is not allowed as
deduction
6,000.00
Legal fees to the extent of new building is not allowed as
deduction
4,500.00
Gross income 323,191.58

3
CANADIAN TAX ASSIGNMENT
Less: Deductions
Donation to registered charities 5,000.00
CCA on new retail location
Building @6% 8,235.00
Landscaping @6% 300.00
Parking lot @6% 2,400.00
10,935.00
CCA on new furniture 5,000.00
CCA on old furniture 590.00
CCA on undepreciated capital cost
Class 1 6,000.00
Class 8 6,400.00
33,925.00
Taxable income 289,266.58
As per the above calculation minimum taxable income of XYZ for the year 2018 is $289,266.58
(1).

4
CANADIAN TAX ASSIGNMENT
Working notes:
Note I
Depreciation on old furniture
Year Depreciation
2011 2,500.00
2012 4,500.00
2013 3,600.00
2014 2,880.00
2015 2,304.00
2016 1,843.20
2017 1,474.56
2018 589.82
19,691.58
WDV value of the furniture sold 5,308.42
Capital gain on sale of furniture 9,691.58

5
CANADIAN TAX ASSIGNMENT
Part DII:
DII
Part I
Federal income tax
Particulars Amount ($) Amount ($)
Taxable income 289,266.58
Tax rate 0.38
Federal income tax 109,921.30
Less: Federal abatement (294266.58 x 10%) 28,926.66
Net amount 80,994.64
Less: Deduction SBD for CCPC (289266.58 x 18%) 52,067.99
Less: Losses from property 8,000.00
44,067.99
Less: M&P deduction
13% of TI less income qualifying for SBD (Note I) -
Less: General rate deduction (Note II) -

6
CANADIAN TAX ASSIGNMENT
Add: Provincial tax 10% 28,926.66
Total tax 72,994.64
Part IV
Particulars Amount ($) Amount ($)
Taxable dividend received (10000 +3000) 13,000.00
Rate of tax 38.33%
Federal part IV tax payable 4,982.90
Notes:
I. Since entire taxable income has qualified for SBD thus, M&P deduction is zero.
II. Since entire taxable income has qualified for SBD thus, General rate deduction is zero.
RDTOH calculation:
Particulars Amount ($) Amount
($)
RDTOH at the beginning 5,000
.00
Add:

7
CANADIAN TAX ASSIGNMENT
Proportion of dividend received from
LMN
92
0.10
Proportion of dividend received from
ABC
3,06
7.00
3,987
.10
RDTOH at the end 8,987
.10
RDTOH balance at the end of 2018 is $8,987.10 as per the calculation in the table above (2).
Calculation of dividend refund is shown below.
Particulars Amount ($) Amount
($)
Dividend refund from LMN (2000 x
9%)
18
0.00
Dividend refund from ABC Inc.
(2000 x 55)
1,10
0.00
1,280
.00

8
CANADIAN TAX ASSIGNMENT
Defund refund as can be seen from the above calculation is $1,280.00 for the year 2018 (3).
Part DIII:
Particulars Amount ($) Amount ($)
Capital dividend account balance 10,000.00
Add:
Capital dividend from LMN 2,000.00
Balance in capital dividend account 12,000.00

9
CANADIAN TAX ASSIGNMENT
References:
1. TurboTax – Taxes I. Can I Claim Medical Expenses on My Taxes? - TurboTax Tax
Tips & Videos [Internet]. Turbotax.intuit.com. 2019 [cited 19 July 2019]. Available from:
https://turbotax.intuit.com/tax-tips/health-care/can-i-claim-medical-expenses-on-my-taxes/
L1htkVqq9
2. The Federal Dividend Tax Credit in Canada | 2019 TurboTax® Canada Tips [Internet]. 2019
TurboTax® Canada Tips. 2019 [cited 19 July 2019]. Available from:
https://turbotax.intuit.ca/tips/the-federal-dividend-tax-credit-in-canada-332
3. Agency C. Rental Income - Canada.ca [Internet]. Canada.ca. 2019 [cited 19 July 2019].
Available from: https://www.canada.ca/en/revenue-agency/services/forms-publications/
publications/t4036/rental-income-2016.html#P221_15825