Question

Problem C Given the following problem, answer questions 20 to 21 A company operates in Ottawa (Ontario) and last year they had a gross revenue of $2,300,000. They paid $1,150,000 for salaries and benefits and spent $550,00 for other business-related expenses. They use an especial piece of equipment with the UCC of $200,000. The CCA rate for this equipment is 30 % . 20. What is the taxable income of the company? a) $1,150,000 c) $570,000 b) $600,000 d) $540,000 21. The federal tax rates for corporate income are 10% and 15% for small and active businesses, respectively. The provincial tax rates (Ontario) for corporate income are 3.5% and 11.5% for small and active businesses, respectively. The income limit for small businesses for tax deduction is $500,000. How much is their income tax? a) $72,900 c) $95,300 b) $78,100 d) $143,700

Answer 1

20.

Taxable Income = Revenue - salaries- expenses -CCA (CAPITAL COST ALLOWANCE)

=2,300,000-1,150,000-550,000-(200000*30%)

=540,000$