Canadian Income Taxation, 2024/2025:
fr fr fr
Planning and Decision Making 27 fr fr fr fr
th Edition fr
By William Buckwold fr fr
Complete Chapter Solutions Manual ar
fr fr fr fr
e included (Ch 1 to 23)
fr fr fr fr fr
** Immediate Download
fr fr
** Swift Response
fr fr
** All Chapters included
fr fr fr
** Excel Solutions
fr fr
, Buckwold, Kitunen, Roman and Iqbal, Canadian Income Taxation, 2024-2025 Ed.
fr fr fr fr fr fr fr fr fr
CHAPTER 1 fr
TAXATION― ITS ROLE IN BUSINESS DECISION MAKING fr fr fr fr fr fr
Review Questions
fr
1. If income tax is imposed after profits have been determined, why is taxation relevant to bu
fr fr fr fr fr fr fr fr fr fr fr fr fr fr fr
siness decision making? fr fr
2. Most business decisions involve the evaluation of alternative courses of action. For examp
fr fr fr fr fr fr fr fr fr fr fr fr
le, a marketing manager may be responsible for choosing a strategy for establishing sales i
fr fr fr fr fr fr fr fr fr fr fr fr fr fr
n new geographical territories. Briefly explain how the tax factor can be an integral part of this
fr fr fr fr fr fr fr fr fr fr fr fr fr fr fr fr
decision.
fr
3. What are the fundamental variables of the income tax system that decision-
fr fr fr fr fr fr fr fr fr fr fr
makers should be familiar with so that they can apply tax issues to their areas of responsibi
fr fr fr fr fr fr fr fr fr fr fr fr fr fr fr fr
lity?
4. What is an ―after-tax‖ approach to decision making?
fr fr fr fr fr fr fr
. 1
Instructor Solutions Manual Chapter One
fr fr fr fr
, Buckwold, Kitunen, Roman and Iqbal, Canadian Income Taxation, 2024-2025 Ed.
fr fr fr fr fr fr fr fr fr
Solutions to Review Questions
fr fr fr
R1-
1 Once profit is determined, the Income Tax Act determines the amount of income tax that
f r fr fr fr fr fr fr fr fr fr fr fr fr fr fr fr
results. However, at all levels of management, alternative courses of action are evaluated. I
fr fr fr fr fr fr fr fr fr fr fr fr fr
n many cases, the choice of one alternative over the other may affect both the amount and the
fr fr fr fr fr fr fr fr fr fr fr fr fr fr fr fr fr fr
timing of future taxes on income generated from that activity. Therefore, the person making
fr fr fr fr fr fr fr fr fr fr fr fr fr fr
those decisions has a direct input into future after-
fr fr fr fr fr fr fr fr
tax cash flow. Obviously, decisions that reduce or postpone the payment of tax affect the ult
fr fr fr fr fr fr fr fr fr fr fr fr fr fr fr
imate return on investment and, in turn, the value of the enterprise. Including the tax variabl
fr fr fr fr fr fr fr fr fr fr fr fr fr fr fr
e as a part of the formal decision process will ultimately lead to improved after-
fr fr fr fr fr fr fr fr fr fr fr fr fr fr
tax cash flow.
fr fr
R1-
2 Expansion can be achieved in new geographic areas through direct selling, or by establis
fr fr fr fr fr fr fr fr fr fr fr fr fr fr
hing a formal presence in the new territory with a branch office or a separate corporation. Th
fr fr fr fr fr fr fr fr fr fr fr fr fr fr fr fr
e new territories may also cross provincial or international boundaries. Provincial income ta
fr fr fr fr fr fr fr fr fr fr fr fr
x rates vary amongst the provinces. The amount of income that is subject to tax in the new p
fr fr fr fr fr fr fr fr fr fr fr fr fr fr fr fr fr fr
rovince will be different for each of the three alternatives mentioned above. For example, wit
fr fr fr fr fr fr fr fr fr fr fr fr fr fr
h direct selling, none of the income is taxed in the new province, but with a separate corpora
fr fr fr fr fr fr fr fr fr fr fr fr fr fr fr fr fr
tion, all of the income is taxed in the new province. Because the tax cost is different in each ca
fr fr fr fr fr fr fr fr fr fr fr fr fr fr fr fr fr fr fr
se, taxation is a relevant part of the decision and must be included in any cost-
fr fr fr fr fr fr fr fr fr fr fr fr fr fr fr
benefit analysis that compares the three alternatives [Reg. 400-402.1].
fr fr fr fr fr fr fr fr
R1-
3 A basic understanding of the following variables will significantly strengthen a decision ma
fr fr fr fr fr fr fr fr fr fr fr fr fr
ker's ability to apply tax issues to their area of responsibility.
fr fr fr fr fr fr fr fr fr fr
Types of Income fr fr -
Employment, Business, Property, Capital gains Tax fr fr fr fr fr
able Entities fr - Individuals, Corporations, Trusts fr fr
Alternative Business fr -
Corporation, Proprietorship, Partnership, Limited Stru fr fr fr fr
ctures partnership, Joint arrangement, Income trust fr fr fr fr
Tax Jurisdictions fr - Federal, Provincial, Foreign fr fr
R1-
4 All cash flow decisions, whether related to revenues, expenses, asset acquisitions or dive
fr fr fr fr fr fr fr fr fr fr fr fr fr
stitures, or debt and equity restructuring, will impact the amount and timing of the tax cost. T
fr fr fr fr fr fr fr fr fr fr fr fr fr fr fr fr
herefore, cash flow exists only on an after tax basis, and, the tax impacts whether or not the
fr fr fr fr fr fr fr fr fr fr fr fr fr fr fr fr f r f r
ultimate result of the decision is successful. An after-tax approach to decision-
f r f r f r f r f r f r f r f r f r f r f r
making requires each decision-maker to think "after-
fr fr fr fr fr fr
tax" for every decision at the time the decision is being made, and, to consider alternative co
fr fr fr fr fr fr fr fr fr fr fr fr fr fr fr fr
urses of action to minimize the tax cost, in the same way that decisions are made regarding
fr fr fr fr fr fr fr fr fr fr fr fr fr fr fr fr fr
other types of costs. fr fr fr
Failure to apply an after- fr fr fr fr
tax approach at the time that decisions are made may provide inaccurate information fo
fr fr fr fr fr fr fr fr fr fr fr fr fr
r evaluation, and, result in a permanently inefficient tax structure.
fr fr fr fr fr fr fr fr fr
, Buckwold, Kitunen, Roman and Iqbal, Canadian Income Taxation, 2024-2025 Ed.
fr fr fr fr fr fr fr fr fr
CHAPTER 1 fr
TAXATION― ITS ROLE IN BUSINESS DECISION MAKING
fr fr fr fr fr fr
. 2
Instructor Solutions Manual Chapter One
fr fr fr fr
fr fr fr
Planning and Decision Making 27 fr fr fr fr
th Edition fr
By William Buckwold fr fr
Complete Chapter Solutions Manual ar
fr fr fr fr
e included (Ch 1 to 23)
fr fr fr fr fr
** Immediate Download
fr fr
** Swift Response
fr fr
** All Chapters included
fr fr fr
** Excel Solutions
fr fr
, Buckwold, Kitunen, Roman and Iqbal, Canadian Income Taxation, 2024-2025 Ed.
fr fr fr fr fr fr fr fr fr
CHAPTER 1 fr
TAXATION― ITS ROLE IN BUSINESS DECISION MAKING fr fr fr fr fr fr
Review Questions
fr
1. If income tax is imposed after profits have been determined, why is taxation relevant to bu
fr fr fr fr fr fr fr fr fr fr fr fr fr fr fr
siness decision making? fr fr
2. Most business decisions involve the evaluation of alternative courses of action. For examp
fr fr fr fr fr fr fr fr fr fr fr fr
le, a marketing manager may be responsible for choosing a strategy for establishing sales i
fr fr fr fr fr fr fr fr fr fr fr fr fr fr
n new geographical territories. Briefly explain how the tax factor can be an integral part of this
fr fr fr fr fr fr fr fr fr fr fr fr fr fr fr fr
decision.
fr
3. What are the fundamental variables of the income tax system that decision-
fr fr fr fr fr fr fr fr fr fr fr
makers should be familiar with so that they can apply tax issues to their areas of responsibi
fr fr fr fr fr fr fr fr fr fr fr fr fr fr fr fr
lity?
4. What is an ―after-tax‖ approach to decision making?
fr fr fr fr fr fr fr
. 1
Instructor Solutions Manual Chapter One
fr fr fr fr
, Buckwold, Kitunen, Roman and Iqbal, Canadian Income Taxation, 2024-2025 Ed.
fr fr fr fr fr fr fr fr fr
Solutions to Review Questions
fr fr fr
R1-
1 Once profit is determined, the Income Tax Act determines the amount of income tax that
f r fr fr fr fr fr fr fr fr fr fr fr fr fr fr fr
results. However, at all levels of management, alternative courses of action are evaluated. I
fr fr fr fr fr fr fr fr fr fr fr fr fr
n many cases, the choice of one alternative over the other may affect both the amount and the
fr fr fr fr fr fr fr fr fr fr fr fr fr fr fr fr fr fr
timing of future taxes on income generated from that activity. Therefore, the person making
fr fr fr fr fr fr fr fr fr fr fr fr fr fr
those decisions has a direct input into future after-
fr fr fr fr fr fr fr fr
tax cash flow. Obviously, decisions that reduce or postpone the payment of tax affect the ult
fr fr fr fr fr fr fr fr fr fr fr fr fr fr fr
imate return on investment and, in turn, the value of the enterprise. Including the tax variabl
fr fr fr fr fr fr fr fr fr fr fr fr fr fr fr
e as a part of the formal decision process will ultimately lead to improved after-
fr fr fr fr fr fr fr fr fr fr fr fr fr fr
tax cash flow.
fr fr
R1-
2 Expansion can be achieved in new geographic areas through direct selling, or by establis
fr fr fr fr fr fr fr fr fr fr fr fr fr fr
hing a formal presence in the new territory with a branch office or a separate corporation. Th
fr fr fr fr fr fr fr fr fr fr fr fr fr fr fr fr
e new territories may also cross provincial or international boundaries. Provincial income ta
fr fr fr fr fr fr fr fr fr fr fr fr
x rates vary amongst the provinces. The amount of income that is subject to tax in the new p
fr fr fr fr fr fr fr fr fr fr fr fr fr fr fr fr fr fr
rovince will be different for each of the three alternatives mentioned above. For example, wit
fr fr fr fr fr fr fr fr fr fr fr fr fr fr
h direct selling, none of the income is taxed in the new province, but with a separate corpora
fr fr fr fr fr fr fr fr fr fr fr fr fr fr fr fr fr
tion, all of the income is taxed in the new province. Because the tax cost is different in each ca
fr fr fr fr fr fr fr fr fr fr fr fr fr fr fr fr fr fr fr
se, taxation is a relevant part of the decision and must be included in any cost-
fr fr fr fr fr fr fr fr fr fr fr fr fr fr fr
benefit analysis that compares the three alternatives [Reg. 400-402.1].
fr fr fr fr fr fr fr fr
R1-
3 A basic understanding of the following variables will significantly strengthen a decision ma
fr fr fr fr fr fr fr fr fr fr fr fr fr
ker's ability to apply tax issues to their area of responsibility.
fr fr fr fr fr fr fr fr fr fr
Types of Income fr fr -
Employment, Business, Property, Capital gains Tax fr fr fr fr fr
able Entities fr - Individuals, Corporations, Trusts fr fr
Alternative Business fr -
Corporation, Proprietorship, Partnership, Limited Stru fr fr fr fr
ctures partnership, Joint arrangement, Income trust fr fr fr fr
Tax Jurisdictions fr - Federal, Provincial, Foreign fr fr
R1-
4 All cash flow decisions, whether related to revenues, expenses, asset acquisitions or dive
fr fr fr fr fr fr fr fr fr fr fr fr fr
stitures, or debt and equity restructuring, will impact the amount and timing of the tax cost. T
fr fr fr fr fr fr fr fr fr fr fr fr fr fr fr fr
herefore, cash flow exists only on an after tax basis, and, the tax impacts whether or not the
fr fr fr fr fr fr fr fr fr fr fr fr fr fr fr fr f r f r
ultimate result of the decision is successful. An after-tax approach to decision-
f r f r f r f r f r f r f r f r f r f r f r
making requires each decision-maker to think "after-
fr fr fr fr fr fr
tax" for every decision at the time the decision is being made, and, to consider alternative co
fr fr fr fr fr fr fr fr fr fr fr fr fr fr fr fr
urses of action to minimize the tax cost, in the same way that decisions are made regarding
fr fr fr fr fr fr fr fr fr fr fr fr fr fr fr fr fr
other types of costs. fr fr fr
Failure to apply an after- fr fr fr fr
tax approach at the time that decisions are made may provide inaccurate information fo
fr fr fr fr fr fr fr fr fr fr fr fr fr
r evaluation, and, result in a permanently inefficient tax structure.
fr fr fr fr fr fr fr fr fr
, Buckwold, Kitunen, Roman and Iqbal, Canadian Income Taxation, 2024-2025 Ed.
fr fr fr fr fr fr fr fr fr
CHAPTER 1 fr
TAXATION― ITS ROLE IN BUSINESS DECISION MAKING
fr fr fr fr fr fr
. 2
Instructor Solutions Manual Chapter One
fr fr fr fr
