Canadian Income Taxation, 2023/2024:
r r r
Planning and Decision Making26tr r r r
h Edition r
By William Buckwold r r
Complete Chapter Solutions Manualare
r r r r
included (Ch 1 to 23)
r r r r r
** Immediate Download
r r
** Swift Response
r r
** All Chapters included
r r r
** Excel Solutions
r r
, Buckwold,rKitunen,rRomanrandrIqbal,rCanadianrIncomerTaxation,r2023-2024rEd.
CHAPTER 1 r
TAXATION― ITS ROLE IN BUSINESS DECISION MAKING
r r r r r r
ReviewrQuestions
1. Ifrincomertaxrisrimposedrafterrprofitsrhaverbeenrdetermined,rwhyrisrtaxationrrelevantrtorbusin
essrdecisionrmaking?
2. Mostrbusinessrdecisionsrinvolvertherevaluationrofralternativercoursesrofraction.rForrexample
,rarmarketingrmanagerrmayrberresponsiblerforrchoosingrarstrategyrforrestablishingrsalesrinrn
ewrgeographicalrterritories.rBrieflyrexplainrhowrthertaxrfactorrcanrberanrintegralrpartrofrthisrdeci
sion.
3. Whatrarertherfundamentalrvariablesrofrtherincomertaxrsystemrthatrdecision-
makersrshouldrberfamiliarrwithrsorthatrtheyrcanrapplyrtaxrissuesrtortheirrareasrofrresponsibility
?
4. Whatrisranr“after-tax”rapproachrtordecisionrmaking?
. 1
InstructorrSolutionsrManualrChapterrOne
, Buckwold,rKitunen,rRomanrandrIqbal,rCanadianrIncomerTaxation,r2023-2024rEd.
SolutionsrtorReviewrQuestions
R1-
1rOncerprofitrisrdetermined,rtherIncomerTaxrActrdeterminesrtheramountrofrincomertaxrthatrres
ults.rHowever,ratrallrlevelsrofrmanagement,ralternativercoursesrofractionrarerevaluated.rInrman
yrcases,rtherchoicerofroneralternativeroverrtherotherrmayraffectrbothrtheramountrandrthertimingro
frfuturertaxesronrincomergeneratedrfromrthatractivity.rTherefore,rtherpersonrmakingrthoserdeci
sionsrhasrardirectrinputrintorfuturerafter-
taxrcashrflow.rObviously,rdecisionsrthatrreducerorrpostponertherpaymentrofrtaxraffectrtherultim
aterreturnronrinvestmentrand,rinrturn,rthervaluerofrtherenterprise.rIncludingrthertaxrvariablerasrar
partrofrtherformalrdecisionrprocessrwillrultimatelyrleadrtorimprovedrafter-taxrcashrflow.
R1-
2rExpansionrcanrberachievedrinrnewrgeographicrareasrthroughrdirectrselling,rorrbyrestablishin
grarformalrpresencerinrthernewrterritoryrwithrarbranchrofficerorrarseparatercorporation.rTherne
wrterritoriesrmayralsorcrossrprovincialrorrinternationalrboundaries.rProvincialrincomertaxrrates
rvaryramongstrtherprovinces.rTheramountrofrincomerthatrisrsubjectrtortaxrinrthernewrprovincerw
illrberdifferentrforreachrofrtherthreeralternativesrmentionedrabove.rForrexample,rwithrdirectrselli
ng,rnonerofrtherincomerisrtaxedrinrthernewrprovince,rbutrwithrarseparatercorporation,rallrofrtheri
ncomerisrtaxedrinrthernewrprovince.rBecauserthertaxrcostrisrdifferentrinreachrcase,rtaxationrisrarr
elevantrpartrofrtherdecisionrandrmustrberincludedrinranyrcost-
benefitranalysisrthatrcomparesrtherthreeralternativesr[Reg.r400-402.1].
R1-
3rArbasicrunderstandingrofrtherfollowingrvariablesrwillrsignificantlyrstrengthenrardecisionrmak
er'srabilityrtorapplyrtaxrissuesrtortheirrarearofrresponsibility.
TypesrofrIncome -
Employment,rBusiness,rProperty,rCapitalrgainsrTax
ablerEntities - Individuals,rCorporations,rTrusts
AlternativerBusiness -
Corporation,rProprietorship,rPartnership,rLimitedrStru
ctures partnership,rJointrarrangement,rIncomertrust
TaxrJurisdictions - Federal,rProvincial,rForeign
R1-
4rAllrcashrflowrdecisions,rwhetherrrelatedrtorrevenues,rexpenses,rassetracquisitionsrorrdivesti
tures,rorrdebtrandrequityrrestructuring,rwillrimpactrtheramountrandrtimingrofrthertaxrcost.rThere
fore,rcashrflowrexistsronlyronranrafterrtaxrbasis,rand,rthertaxrimpactsrwhetherrorrnotrtherultimaterr
esultrofrtherdecisionrisrsuccessful.rAnrafter-taxrapproachrtordecision-
makingrrequiresreachrdecision-makerrtorthinkr"after-
tax"rforreveryrdecisionratrthertimertherdecisionrisrbeingrmade,rand,rtorconsiderralternativercour
sesrofractionrtorminimizerthertaxrcost,rinrthersamerwayrthatrdecisionsrarermaderregardingrotherr
typesrofrcosts.
Failurer tor applyr anr after-
taxr approachr atr ther timer thatr decisionsr arer mader mayr providerinaccuraterinformationrforreva
luation,rand,rresultrinrarpermanentlyrinefficientrtaxrstructure.
, Buckwold,rKitunen,rRomanrandrIqbal,rCanadianrIncomerTaxation,r2023-2024rEd.
CHAPTER 1 r
. 2
InstructorrSolutionsrManualrChapterrOne
r r r
Planning and Decision Making26tr r r r
h Edition r
By William Buckwold r r
Complete Chapter Solutions Manualare
r r r r
included (Ch 1 to 23)
r r r r r
** Immediate Download
r r
** Swift Response
r r
** All Chapters included
r r r
** Excel Solutions
r r
, Buckwold,rKitunen,rRomanrandrIqbal,rCanadianrIncomerTaxation,r2023-2024rEd.
CHAPTER 1 r
TAXATION― ITS ROLE IN BUSINESS DECISION MAKING
r r r r r r
ReviewrQuestions
1. Ifrincomertaxrisrimposedrafterrprofitsrhaverbeenrdetermined,rwhyrisrtaxationrrelevantrtorbusin
essrdecisionrmaking?
2. Mostrbusinessrdecisionsrinvolvertherevaluationrofralternativercoursesrofraction.rForrexample
,rarmarketingrmanagerrmayrberresponsiblerforrchoosingrarstrategyrforrestablishingrsalesrinrn
ewrgeographicalrterritories.rBrieflyrexplainrhowrthertaxrfactorrcanrberanrintegralrpartrofrthisrdeci
sion.
3. Whatrarertherfundamentalrvariablesrofrtherincomertaxrsystemrthatrdecision-
makersrshouldrberfamiliarrwithrsorthatrtheyrcanrapplyrtaxrissuesrtortheirrareasrofrresponsibility
?
4. Whatrisranr“after-tax”rapproachrtordecisionrmaking?
. 1
InstructorrSolutionsrManualrChapterrOne
, Buckwold,rKitunen,rRomanrandrIqbal,rCanadianrIncomerTaxation,r2023-2024rEd.
SolutionsrtorReviewrQuestions
R1-
1rOncerprofitrisrdetermined,rtherIncomerTaxrActrdeterminesrtheramountrofrincomertaxrthatrres
ults.rHowever,ratrallrlevelsrofrmanagement,ralternativercoursesrofractionrarerevaluated.rInrman
yrcases,rtherchoicerofroneralternativeroverrtherotherrmayraffectrbothrtheramountrandrthertimingro
frfuturertaxesronrincomergeneratedrfromrthatractivity.rTherefore,rtherpersonrmakingrthoserdeci
sionsrhasrardirectrinputrintorfuturerafter-
taxrcashrflow.rObviously,rdecisionsrthatrreducerorrpostponertherpaymentrofrtaxraffectrtherultim
aterreturnronrinvestmentrand,rinrturn,rthervaluerofrtherenterprise.rIncludingrthertaxrvariablerasrar
partrofrtherformalrdecisionrprocessrwillrultimatelyrleadrtorimprovedrafter-taxrcashrflow.
R1-
2rExpansionrcanrberachievedrinrnewrgeographicrareasrthroughrdirectrselling,rorrbyrestablishin
grarformalrpresencerinrthernewrterritoryrwithrarbranchrofficerorrarseparatercorporation.rTherne
wrterritoriesrmayralsorcrossrprovincialrorrinternationalrboundaries.rProvincialrincomertaxrrates
rvaryramongstrtherprovinces.rTheramountrofrincomerthatrisrsubjectrtortaxrinrthernewrprovincerw
illrberdifferentrforreachrofrtherthreeralternativesrmentionedrabove.rForrexample,rwithrdirectrselli
ng,rnonerofrtherincomerisrtaxedrinrthernewrprovince,rbutrwithrarseparatercorporation,rallrofrtheri
ncomerisrtaxedrinrthernewrprovince.rBecauserthertaxrcostrisrdifferentrinreachrcase,rtaxationrisrarr
elevantrpartrofrtherdecisionrandrmustrberincludedrinranyrcost-
benefitranalysisrthatrcomparesrtherthreeralternativesr[Reg.r400-402.1].
R1-
3rArbasicrunderstandingrofrtherfollowingrvariablesrwillrsignificantlyrstrengthenrardecisionrmak
er'srabilityrtorapplyrtaxrissuesrtortheirrarearofrresponsibility.
TypesrofrIncome -
Employment,rBusiness,rProperty,rCapitalrgainsrTax
ablerEntities - Individuals,rCorporations,rTrusts
AlternativerBusiness -
Corporation,rProprietorship,rPartnership,rLimitedrStru
ctures partnership,rJointrarrangement,rIncomertrust
TaxrJurisdictions - Federal,rProvincial,rForeign
R1-
4rAllrcashrflowrdecisions,rwhetherrrelatedrtorrevenues,rexpenses,rassetracquisitionsrorrdivesti
tures,rorrdebtrandrequityrrestructuring,rwillrimpactrtheramountrandrtimingrofrthertaxrcost.rThere
fore,rcashrflowrexistsronlyronranrafterrtaxrbasis,rand,rthertaxrimpactsrwhetherrorrnotrtherultimaterr
esultrofrtherdecisionrisrsuccessful.rAnrafter-taxrapproachrtordecision-
makingrrequiresreachrdecision-makerrtorthinkr"after-
tax"rforreveryrdecisionratrthertimertherdecisionrisrbeingrmade,rand,rtorconsiderralternativercour
sesrofractionrtorminimizerthertaxrcost,rinrthersamerwayrthatrdecisionsrarermaderregardingrotherr
typesrofrcosts.
Failurer tor applyr anr after-
taxr approachr atr ther timer thatr decisionsr arer mader mayr providerinaccuraterinformationrforreva
luation,rand,rresultrinrarpermanentlyrinefficientrtaxrstructure.
, Buckwold,rKitunen,rRomanrandrIqbal,rCanadianrIncomerTaxation,r2023-2024rEd.
CHAPTER 1 r
. 2
InstructorrSolutionsrManualrChapterrOne
