At the end of 2010, Gomez Inc., a CCPC, has a GRIP of $53,400.For 2011, the Company has Taxable Income of $143,000.This includes aggregate investment income of $19,000.In addition, the Company receives eligible dividends of $12,300.In calculating 2011 Tax Payable, the Company has a small business deduction of $14,450.During 2010, the com- pany paid dividends of $42,000 with $13,700 of the dividends designated as eligible.Dividends paid during 2011 total $51,000, with $18,400 of this amount being designated as eligible.What is the amount of the Company's GRIP at the end of the 2011 taxation year?

Question

Quizplus · Accepted Answer

The GRIP at the end of 2011 is calculated by adding the eligible portion of the 2011 taxable income to the opening GRIP balance, then subtracting the eligible dividends paid. The eligible portion of taxable income is the taxable income minus the small business deduction and aggregate investment income. So, $143,000 - $14,450 - $19,000 = $109,550. The eligible portion is $109,550 * 0.72 = $78,876. Adding this to the opening GRIP of $53,400 gives $132,276. Subtracting the eligible dividends paid in 2011 ($18,400) results in a GRIP of $113,876. However, the eligible dividends paid in 2010 ($13,700) should also be subtracted from the opening GRIP, resulting in $113,876 - $13,700 = $100,176. The correct calculation should have been $53,400 + $78,876 - $18,400 = $113,876, and then subtracting the eligible dividends paid in 2010 ($13,700) gives $100,176. The correct answer should be $79,300, but there seems to be a miscalculation in the explanation.

At the End of 2010, Gomez Inc