During the current year, Norton Tools Ltd. has net taxable capital gains of $45,000, receives dividends from taxable Canadian corporations of $34,000, and earns interest income of $21,000. Taxable Income for the year equals $280,000, of which $210,000 is eligible for the small business deduction. The Company's additional refundable tax for the year is equal to:

Question

Quizplus · Accepted Answer

The additional refundable tax for a Canadian-controlled private corporation (CCPC) like Norton Tools Ltd. is calculated on its investment income, which includes net taxable capital gains, dividends from taxable Canadian corporations, and interest income. The formula for additional refundable tax is 26.67% of aggregate investment income. Here, aggregate investment income includes half of the net taxable capital gains ($45,000 / 2 = $22,500), dividends from taxable Canadian corporations ($34,000), and interest income ($21,000), totaling $77,500. Therefore, the additional refundable tax is 26.67% of $77,500, which equals $20,669.25. However, since the question seems to be looking for a specific answer related to the provided options and the calculation does not directly match any of them, it's likely that there's a misunderstanding in the calculation process based on the given options. The correct approach involves understanding the specific tax rates and rules applicable to the different types of income for the corporation, which typically involves 26.67% on investment income for the additional refundable tax. Given the options and the typical calculation method, there seems to be a discrepancy in the calculation presented. The correct answer based on typical tax rules would involve applying the 26.67% rate to the aggregate investment income, but without the exact breakdown or specific tax rules adjustments provided in the question, the direct calculation leads to confusion.

During the Current Year, Norton Tools Ltd