BUSI 4005 B TAXATION II Assignment Two Winter 2025

Question 1 (35 marks)

Orion Enterprises Inc.is a Canadian-Controlled Private Corporation (CCPC) involved in wholesale and manufacturing operations, with business activities confined to Canada. Orion holds 60% of the voting common shares in Nova Ltd. For the fiscal year ending December 31, 2024, Orion Enterprises Inc. reported the following taxable income: 

Net income for tax purposes           $ 600,000

Less: 

Net capital loss    (12,000)

Charitable donations   (7,000)

Taxable Canadian dividends from shares of public corporations  (18,000)

Taxable income     $563,000

The net income includes $20,000 of net taxable capital gains and $14,000 of interest income from bonds. It also encompasses $18,000 of dividends from public corporations, which were deducted in the calculation of taxable income above. Profits from manufacturing and processing (M&P) qualifying for the M&P deduction amount to $420,000. 

Additional Information:

• Orion's non-eligible Refundable Dividend Tax on Hand (RDTOH) at the end of 2023 was $12,000. And the eligible RDTOH balance $4,000.
• Orion's General Rate Income Pool (GRIP) balance at the end of the previous year was $21,000.
•  During the year, Orion distributed non-eligible dividends totaling $35,000 and eligible dividends of $22,000 to its shareholders. In the previous year, $10,000 of eligible dividends were paid, resulting in a dividend refund of $3,833.
• Nova Ltd. and Orion Enterprises Inc. are associated for tax purposes. For the fiscal year ending December 31, 2024, Nova Ltd. claimed the small business deduction on $120,000 of its active business income. Nova distributed a non-eligible dividend of $50,000 resulting in a dividend refund of $5,000 in 2024.

Required: Calculate the 2024 taxes payable, including schedules such as the General Rate Income Pool (GRIP) balance.