Niles Wholesale Ltd. (“NWL”), is a Canadian controlled private corporation that was
incorporated fifteen years ago by Ms. Jessenia Niles. Its only business activity is the sale of
French sourced cookware to upscale kitchen retailers across Canada. Ms. Niles is a Canadian
resident and is the sole shareholder of the Company. NWL has a fiscal year ending on 31,
and, for 2020, NWL’s accountant produced the following Income Statement:
Sales Revenue $1,916,400
Cost of Goods Sold ( 940,000)
Gross Profit $ 976,400
Selling and Administration ($315,000)
Amortization Expense ( 47,000)
Charitable Donations ( 15,000) ( 377,000)
Operating Income $ 599,400
Other Income and Losses:
Eligible Dividends Received $ 27,000
Loss on Sale of Truck ( 19,000)
Gain on Sale of Investments 7,000 15,000
Pre-Tax Accounting Income $ 614,400
- NWL had depreciable assets with the following undepreciated capital cost (UCC) balances at
the beginning of its 2020 taxation year:
Class 3 (5%) $726,000
Class 8 (20%) 472,000
Class 10 (30%) 22,000
The balance in Class 10 reflects a single truck that was used for deliveries. It had an original
cost of $38,000 and a net book value for accounting purposes of $29,000. It was sold in 2020
for $10,000, and replaced with a leased truck.
The only other transaction involving depreciable assets during the year was the acquisition of
$82,000 in Class 8 assets.
- On January 1, 2020, NWL had an Eligible RDTOH balance of $14,000 and a Non-Eligible
RDTOH balance of nil.
- On January 1, 2020, NWL has a GRIP balance of $132,500. During 2019, the Company
designated $9,600 of its dividends as eligible.
- For 2019, NWL had ADJUSTED Aggregate Investment Income of $24,680. Its Taxable
Capital Employed in Canada was $4,672,000 for 2019.
- During 2020, NWL paid $17,000 in dividends to Ms. Niles. It is the policy of the corporation to
only designate dividends as eligible to the extent that a refund will be available on their
- The investments that were sold during the year had been purchased for $93,000. They were
sold for $100,000.
Required: Show all of the calculations used to provide the following required information,
including those for which the result is nil.
A. Determine NWL’s minimum Net Income for Tax Purposes and Taxable Income for the year
ending December 31, 2020.
B. Determine NWL’s Part I Tax Payable for the year ending December 31, 2020.
C. Determine the refundable portion of NWL’s Part I Tax Payable.
D. Determine NWL’s Part IV Tax Payable for 2020.
E. Determine NWL’s GRIP on December 31, 2020.
F. Determine the December 31, 2020 balances in NWL’s Eligible and Non-Eligible RDTOH
G. Determine the 2020 dividend refund, showing separately the amounts related to eligible and
H. Determine NWL’s federal Tax Payable for the year ending December 31, 2020. This should
include both Part I and Part IV Tax Payable, net of any dividend refund.
Legal Factor may often be overlap with political, however it involves more specifics laws such as health and safety law or consumer protection law. Organizations should know what is legal and what is not in order to run businesses ethically (B2U – Business-to-you.com, 2019). Health and safety law is needed so that the company will hold responsibility for the workers. It is the company’s responsibility to ensure that the workers are treated ethically. In addition, consumer protection law is to protect consumers from buying milk that are of low quality or other aspects that A2 Milk guaranteed but not fulfilled. Furthermore, Food standard codes is required for to comply with the laws of standard in operation. Conclusion on PESTEL Analysis In conclusion, PESTEL seeks to address opportunities and threat which A2 milk may face from external environment. It is crucial to note that all factor from this analysis would have a huge impact to A2 milk. This will allow A2 Milk to make better choices for the company in the future. INDUSTRY ANALYSIS (PORTER’S FIVE FORCES FRAMEWORK) The industry analysis is a framework that helps to determine the attractiveness of an industry that highlights five competitive forcers including threat of entry, threat of substitutes, bargaining power of buyers, bargaining power of suppliers and the extend of rivalry between competitors. Furthermore, it can help organizations to build sustainable competive advantage in the milk industry. The threat of entry This determines how easy it is for new companies to enter a particular industry. When the barriers of entry into an industry is high, there are lesser businesses entering the market due to strong competition and vice versa (My Accounting Course, 2019). In this industry, it is hard to enter because the threat of entry is low, hence causing the barrier to entry is high. The following factors are some reason that justify the low threat of entry. The economies of scale is hard to achieve therefore, causing the production to be more expensive for new companies. Production differentiation is strong as in this industry all company sells differentiated products. Customers also look for differentiated products. Therefore, the threat of entry is low. Capital requirements are high in this industry and its hard for new companies to set up businesses with the same expenditures incurred by existing companies. Government policies also ensure that many regulations need to be followed before companies can start selling their product in the market. This enforcement makes it hard for new companies to enter. Therefore,>GET ANSWER