Greg is the sole shareholder of GK Ltd., a Canadian-controlled private corporation carrying on an active business, with a December 31 fiscal year end. Greg met with you on January 6, 20X6 (the current year) about a number of issues. On August 1, 20X5, Greg received a demand to file a tax return for the 20X3 taxation year. Greg did not file a tax return for 20X3, because salary from GK Ltd. was his only income for the year. The payroll clerk at GK Ltd. was careful to ensure that the correct amount of tax was withheld from Greg’s pay and remitted to the CRA monthly. Thus, Greg is looking for confirmation that he is not required to file a tax return for 20X3. In 20X4, Greg won $500,000 in a lottery which he invested wisely. Because of the investment income, he prepared a tax return for 20X4. He personally delivered the tax return, together with a cheque in the amount of $9,200 for the balance of tax owing, to the CRA on September 30, 20X5. According to Greg’s calculations, he will owe $12,000 in tax on his investment income earned in 20X5, so he plans to file his 20X5 tax return on time. He did not make any tax instalments in 20X5, as he did not receive an instalment notice from the CRA. Greg wonders whether he should make instalments for 20X6. He estimates that the tax on his 20X6 investment income will be $16,000. GK Ltd.’s total federal tax liability was $18,000 in each of 20X3 and 20X4. It increased to $26,200 for 20X5. GK Ltd. made monthly federal tax instalments of $1,500 on the last day of each month in 20X5.Greg wants to ensure that the corporate tax return for 20X5 is filed on time and that all taxes owing are paid by the due date so as to avoid paying interest. GK Ltd. received a notice of reassessment for the 20X1 taxation year, dated December 6, 20X5, stating that the corporation was assessed additional tax for the 20X1 year in the amount of $42,000. Greg is convinced that the reassessment is in error. Greg has the original notice of assessment for 20X1, dated February 21, 20X3, which indicated that the return was assessed as filed. Greg is married and has three children. His wife is a self-employed computer consultant. Required: Prepare a memo to Greg providing advice on the issues. Assume the prescribed rates of interest under Reg. 4301 for computing taxable benefits are 3% for the first, third and fourth quarters, and 2% for the second quarter of 20X5.