, Buckwold, jKitunen, jRoman jand jIqbal, jCanadian jIncome jTaxation, j2023-2024
jEd.
CHAPTER j1
TAXATION― jITS jROLE jIN jBUSINESS jDECISION jMAKING
Review jQuestions
1. If jincome jtax jis jimposed jafter jprofits jhave jbeen jdetermined, jwhy jis jtaxation jrelevant
jto jbusiness jdecision jmaking?
2. Most jbusiness jdecisions jinvolve jthe jevaluation jof jalternative jcourses jof jaction. jFor
jexample, ja jmarketing jmanager jmay jbe jresponsible jfor jchoosing ja jstrategy jfor
jestablishing jsales jin jnew jgeographical jterritories. jBriefly jexplain jhow jthe jtax jfactor jcan
jbejan jintegral jpart jof jthis jdecision.
3. What jare jthe jfundamental jvariables jof jthe jincome jtax jsystem jthat jdecision-makers
jshouldjbe jfamiliar jwith jso jthat jthey jcan japply jtax jissues jto jtheir jareas jof jresponsibility?
4. What jis jan j―after-tax‖ japproach jto jdecision jmaking?
. 1
Instructor jSolutions jManual jChapter jOne
, Buckwold, jKitunen, jRoman jand jIqbal, jCanadian jIncome jTaxation, j2023-2024
jEd.
Solutions jto jReview jQuestions
R1-1 jOnce jprofit jis jdetermined, jthe jIncome jTax jAct jdetermines jthe jamount jof jincome jtax
jthat jresults. jHowever, jat jall jlevels jof jmanagement, jalternative jcourses jof jaction jare
jevaluated. jIn jmany jcases, jthe jchoice jof jone jalternative jover jthe jother jmay jaffect jboth jthe
jamount jand jthe jtiming jof jfuture jtaxes jon jincome jgenerated jfrom jthat jactivity. jTherefore,
jthe jperson jmaking jthose jdecisions jhas ja jdirect jinput jinto jfuture jafter-tax jcash jflow.
jObviously, jdecisions jthat jreduce jor jpostpone jthe jpayment jof jtax jaffect jthe jultimate
jreturn jon jinvestment jand, jin jturn, jthe jvalue jof jthe jenterprise. jIncluding jthe jtax jvariable
jas ja jpart jof jthe jformal jdecision jprocess jwill jultimately jlead jto jimproved jafter-tax jcash
jflow.
R1-2 jExpansion jcan jbe jachieved jin jnew jgeographic jareas jthrough jdirect jselling, jor jby
jestablishing ja jformal jpresence jin jthe jnew jterritory jwith ja jbranch joffice jor ja jseparate
jcorporation. jThe jnew jterritories jmay jalso jcross jprovincial jor jinternational jboundaries.
jProvincial jincome jtax jrates jvary jamongst jthe jprovinces. jThe jamount jof jincome jthat jis
jsubject jto jtax jin jthe jnew jprovince jwill jbe jdifferent jfor jeach jof jthe jthree jalternatives
jmentioned jabove. jFor jexample, jwith jdirect jselling, jnone jof jthe jincome jis jtaxed jin jthe
jnew jprovince, jbut jwith ja jseparate jcorporation, jall jof jthe jincome jis jtaxed jin jthe jnew
jprovince. jBecause jthe jtax jcost jis jdifferent jin jeach jcase, jtaxation jis ja jrelevant jpart jof jthe
jdecision jand jmust jbe jincluded jin jany jcost-benefit janalysis jthat jcompares jthe jthree
jalternatives j[Reg. j400-402.1].
R1-3 jA jbasic junderstanding jof jthe jfollowing jvariables jwill jsignificantly jstrengthen ja jdecision
jmaker's jability jto japply jtax jissues jto jtheir jarea jof jresponsibility.
Types jof jIncome - Employment, jBusiness, jProperty, jCapital
jgainsjTaxable jEntities - Individuals, jCorporations, jTrusts
Alternative jBusiness - Corporation, jProprietorship, jPartnership,
jLimitedjStructures partnership, jJoint jarrangement, jIncome jtrust
Tax jJurisdictions - Federal, jProvincial, jForeign
R1-4 jAll jcash jflow jdecisions, jwhether jrelated jto jrevenues, jexpenses, jasset jacquisitions jor
jdivestitures, jor jdebt jand jequity jrestructuring, jwill jimpact jthe jamount jand jtiming jof jthe
jtax jcost. jTherefore, jcash jflow jexists jonly jon jan jafter jtax jbasis, jand, jthe jtax jimpacts
jwhether jor jnot jthe jultimate jresult jof jthe jdecision jis jsuccessful. jAn jafter-tax japproach jto
jdecision-making jrequires jeach jdecision-maker jto jthink j"after-tax" jfor jevery jdecision jat
jthe jtime jthe jdecision jis jbeing jmade, jand, jto jconsider jalternative jcourses jof jaction jto
jminimize jthe jtax jcost, jin jthe jsame jway jthat jdecisions jare jmade jregarding jother jtypes jof
jcosts.
Failure j to j apply j an j after-tax j approach j at j the j time j that j decisions j are j made j may
j providejinaccurate jinformation jfor jevaluation, jand, jresult jin ja jpermanently jinefficient jtax
jstructure.
. 2
, Buckwold, jKitunen, jRoman jand jIqbal, jCanadian jIncome jTaxation, j2023-2024
Instructor jSolutions jManual jjEd.
Chapter jOne
CHAPTER j1
jEd.
CHAPTER j1
TAXATION― jITS jROLE jIN jBUSINESS jDECISION jMAKING
Review jQuestions
1. If jincome jtax jis jimposed jafter jprofits jhave jbeen jdetermined, jwhy jis jtaxation jrelevant
jto jbusiness jdecision jmaking?
2. Most jbusiness jdecisions jinvolve jthe jevaluation jof jalternative jcourses jof jaction. jFor
jexample, ja jmarketing jmanager jmay jbe jresponsible jfor jchoosing ja jstrategy jfor
jestablishing jsales jin jnew jgeographical jterritories. jBriefly jexplain jhow jthe jtax jfactor jcan
jbejan jintegral jpart jof jthis jdecision.
3. What jare jthe jfundamental jvariables jof jthe jincome jtax jsystem jthat jdecision-makers
jshouldjbe jfamiliar jwith jso jthat jthey jcan japply jtax jissues jto jtheir jareas jof jresponsibility?
4. What jis jan j―after-tax‖ japproach jto jdecision jmaking?
. 1
Instructor jSolutions jManual jChapter jOne
, Buckwold, jKitunen, jRoman jand jIqbal, jCanadian jIncome jTaxation, j2023-2024
jEd.
Solutions jto jReview jQuestions
R1-1 jOnce jprofit jis jdetermined, jthe jIncome jTax jAct jdetermines jthe jamount jof jincome jtax
jthat jresults. jHowever, jat jall jlevels jof jmanagement, jalternative jcourses jof jaction jare
jevaluated. jIn jmany jcases, jthe jchoice jof jone jalternative jover jthe jother jmay jaffect jboth jthe
jamount jand jthe jtiming jof jfuture jtaxes jon jincome jgenerated jfrom jthat jactivity. jTherefore,
jthe jperson jmaking jthose jdecisions jhas ja jdirect jinput jinto jfuture jafter-tax jcash jflow.
jObviously, jdecisions jthat jreduce jor jpostpone jthe jpayment jof jtax jaffect jthe jultimate
jreturn jon jinvestment jand, jin jturn, jthe jvalue jof jthe jenterprise. jIncluding jthe jtax jvariable
jas ja jpart jof jthe jformal jdecision jprocess jwill jultimately jlead jto jimproved jafter-tax jcash
jflow.
R1-2 jExpansion jcan jbe jachieved jin jnew jgeographic jareas jthrough jdirect jselling, jor jby
jestablishing ja jformal jpresence jin jthe jnew jterritory jwith ja jbranch joffice jor ja jseparate
jcorporation. jThe jnew jterritories jmay jalso jcross jprovincial jor jinternational jboundaries.
jProvincial jincome jtax jrates jvary jamongst jthe jprovinces. jThe jamount jof jincome jthat jis
jsubject jto jtax jin jthe jnew jprovince jwill jbe jdifferent jfor jeach jof jthe jthree jalternatives
jmentioned jabove. jFor jexample, jwith jdirect jselling, jnone jof jthe jincome jis jtaxed jin jthe
jnew jprovince, jbut jwith ja jseparate jcorporation, jall jof jthe jincome jis jtaxed jin jthe jnew
jprovince. jBecause jthe jtax jcost jis jdifferent jin jeach jcase, jtaxation jis ja jrelevant jpart jof jthe
jdecision jand jmust jbe jincluded jin jany jcost-benefit janalysis jthat jcompares jthe jthree
jalternatives j[Reg. j400-402.1].
R1-3 jA jbasic junderstanding jof jthe jfollowing jvariables jwill jsignificantly jstrengthen ja jdecision
jmaker's jability jto japply jtax jissues jto jtheir jarea jof jresponsibility.
Types jof jIncome - Employment, jBusiness, jProperty, jCapital
jgainsjTaxable jEntities - Individuals, jCorporations, jTrusts
Alternative jBusiness - Corporation, jProprietorship, jPartnership,
jLimitedjStructures partnership, jJoint jarrangement, jIncome jtrust
Tax jJurisdictions - Federal, jProvincial, jForeign
R1-4 jAll jcash jflow jdecisions, jwhether jrelated jto jrevenues, jexpenses, jasset jacquisitions jor
jdivestitures, jor jdebt jand jequity jrestructuring, jwill jimpact jthe jamount jand jtiming jof jthe
jtax jcost. jTherefore, jcash jflow jexists jonly jon jan jafter jtax jbasis, jand, jthe jtax jimpacts
jwhether jor jnot jthe jultimate jresult jof jthe jdecision jis jsuccessful. jAn jafter-tax japproach jto
jdecision-making jrequires jeach jdecision-maker jto jthink j"after-tax" jfor jevery jdecision jat
jthe jtime jthe jdecision jis jbeing jmade, jand, jto jconsider jalternative jcourses jof jaction jto
jminimize jthe jtax jcost, jin jthe jsame jway jthat jdecisions jare jmade jregarding jother jtypes jof
jcosts.
Failure j to j apply j an j after-tax j approach j at j the j time j that j decisions j are j made j may
j providejinaccurate jinformation jfor jevaluation, jand, jresult jin ja jpermanently jinefficient jtax
jstructure.
. 2
, Buckwold, jKitunen, jRoman jand jIqbal, jCanadian jIncome jTaxation, j2023-2024
Instructor jSolutions jManual jjEd.
Chapter jOne
CHAPTER j1
