90.2K

Verified Solution

Link Copied!

Under the Canadian TAX law

HST/GST is 13%

Quantro Enterprises Ltd. and Baizley Holdings Ltd. (BHL) are both 100% owned by Harold Baizley. Both companies are Canadian-controlled private corporations. Quanto operates a wholesale business and pays rent to BHL for the use of a warehouse property. BHL owns only one assetthe warehouse building and related land that is rented by Quantro for $39,600 per year. The property was originally owned by Quantro but was sold to BHL several years ago as a means to reduce the risk exposure of this appreciating asset. On December 31, 2020 (the year end of both companies), BHL sold the warehouse property to a third party for $407,000 (and $44,000, building $363,000). The property originally cost $352,000 (and $27,500, building $324,500). The undepreciated capital cost of the building at December 31, 2019, was $279,400. One month before selling the warehouse property, BHL purchased a newly constructed warehouse property for $528,000. (and $55,000, building $473,000.). Required: Determine BHL's net income for tax purposes for 2020. Rent $ 39,600 Recapture of CCA CCA on new warehouse Net Property Income $ 39,600 Building: Taxable capital gains Land: Taxable capital gains Net Taxable Capital Gains Net Income for Tax purposes 39,600 $

Answer & Explanation Solved by verified expert

See Answer