Chartered Tours Inc

question 7

Essay

Chartered Tours Inc. (CTI) started operations this year and had a net income for tax purposes of $800,000. (Chartered Tours Inc. operates in a province which ha a provincial tax reduction on income earned from manufacturing and
processing.)
During the year, CTI:
a) made a contribution of $25,000 to eligible charities;
b) received $30,000 in dividends from taxable Canadian corporations;
c) recognized manufacturing and processing profits of $250,000; and
d) had active business income of $770,000.
For tax purposes, CTI is associated with Rocky Mountain Hikers Inc. (RMHI).
RMHI used $310,000 of the small business deduction for its active business income.
Required:
Calculate the following, ignoring provincial taxes:
a) CTI's taxable income
b) CTI's small business deduction
c) The M & P deduction available to CTI
d) CTI's general rate reduction
e) The balance in CTI's GRIP account at the end of the year

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Definitions:

Market Equilibrium

A condition or state in which the supply of a product matches its demand, leading to a stable price.

Surplus

An excess amount of a product or resource compared to the demand for it.

Minimum Wage

The lowest legal hourly rate of pay that employers can compensate workers.

Low-skill Workers

Employees possessing minimal technical training or education, often associated with tasks requiring lower levels of cognitive or manual skill.