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SOLUTION MANUAL FOR CANADIAN INCOME TAXATION
SOLUTION MANUAL FOR CANADIAN INCOME TAXATION 25TH
25TH EDITION BY WILLIAM BUCKWOLD, JOAN KITUNEN,
EDITION BY WILLIAM BUCKWOLD, JOAN KITUNEN, MATTHEW
MATTHEW
ROMAN FULLROMAN FULL AND
AND COMPLETE COMPLETE
TESTBANK TESTBANK
|| LATEST ||
AND COMPLETE
LATEST2025
UPDATE ANDALREADY
COMPLETE UPDATE
GRADED A+ 2025 ALREADY GRADED A+
,CHAPTER 1: TAXATION― ITS ROLE IN BUSINESS DECISION MAKING
Review Questions
1. If income tax is imposed after profits have been determined, why is taxation relevant to
business decision making?
2. Most business decisions involve the evaluation of alternative courses of action. For
example, a marketing manager may be responsible for choosing a strategy for establishing sales
in new geographical territories. Briefly explain how the tax factor can be an integral part of this
decision.
3. What are the fundamental variables of the income tax system that decision-makers should
be familiar with so that they can apply tax issues to their areas of responsibility?
4. What is an ―after-tax‖ approach to decision making?
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1
,Solutions to Review Questions
R1-1 Once profit is determined, the Income Tax Act determines the amount of income tax that
results. However, at all levels of management, alternative courses of action are evaluated. In
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many cases, the choice of one alternative over the other may affect both the amount and the
timing of future taxes on income generated from that activity. Therefore, the person making
those decisions has a direct input into future after-tax cash flow. Obviously, decisions that reduce
or postpone the payment of tax affect the ultimate return on investment and, in turn, the value of
the enterprise. Including the tax variable as a part of the formal decision process will ultimately
lead to improved after-tax cash flow.
R1-2 Expansion can be achieved in new geographic areas through direct selling, or by
establishing a formal presence in the new territory with a branch office or a separate corporation.
The new territories may also cross provincial or international boundaries. Provincial income tax
rates vary amongst the provinces. The amount of income that is subject to tax in the new
province will be different for each of the three alternatives mentioned above. For example, with
direct selling, none of the income is taxed in the new province, but with a separate corporation,
all of the income is taxed in the new province. Because the tax cost is different in each case,
taxation is a relevant part of the decision and must be included in any cost-benefit analysis that
compares the three alternatives [Reg. 400-402.1].
R1-3 A basic understanding of the following variables will significantly strengthen a decision
maker's ability to apply tax issues to their area of responsibility.
Types of Income - Employment, Business, Property, Capital gains Taxable Entities
- Individuals, Corporations, Trusts
Alternative Business - Corporation, Proprietorship, Partnership, Limited
Structures partnership, Joint arrangement, Income trust Tax Jurisdictions - Federal,
Provincial, Foreign
, R1-4 All cash flow decisions, whether related to revenues, expenses, asset acquisitions or
divestitures, or debt and equity restructuring, will impact the amount and timing of the tax cost.
Therefore, cash flow exists only on an after tax basis, and, the tax impacts whether or not the
ultimate result of the decision is successful. An after-tax approach to decision- making requires
each decision-maker to think "after-tax" for every decision at the time the decision is being
made, and, to consider alternative courses of action to minimize the tax cost, in the same way
that decisions are made regarding other types of costs.
Failure to apply an after-tax approach at the time that decisions are made may provide inaccurate
information for evaluation, and, result in a permanently inefficient tax structure.
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2
Stuvia.com - The Marketplace to Buy and Sell your Study Material
CHAPTER 2
FUNDAMENTALS OF TAX PLANNING
Review Questions
1. ―Tax planning and tax avoidance mean the same thing.‖ Is this statement true? Explain.
SOLUTION MANUAL FOR CANADIAN INCOME TAXATION
SOLUTION MANUAL FOR CANADIAN INCOME TAXATION 25TH
25TH EDITION BY WILLIAM BUCKWOLD, JOAN KITUNEN,
EDITION BY WILLIAM BUCKWOLD, JOAN KITUNEN, MATTHEW
MATTHEW
ROMAN FULLROMAN FULL AND
AND COMPLETE COMPLETE
TESTBANK TESTBANK
|| LATEST ||
AND COMPLETE
LATEST2025
UPDATE ANDALREADY
COMPLETE UPDATE
GRADED A+ 2025 ALREADY GRADED A+
,CHAPTER 1: TAXATION― ITS ROLE IN BUSINESS DECISION MAKING
Review Questions
1. If income tax is imposed after profits have been determined, why is taxation relevant to
business decision making?
2. Most business decisions involve the evaluation of alternative courses of action. For
example, a marketing manager may be responsible for choosing a strategy for establishing sales
in new geographical territories. Briefly explain how the tax factor can be an integral part of this
decision.
3. What are the fundamental variables of the income tax system that decision-makers should
be familiar with so that they can apply tax issues to their areas of responsibility?
4. What is an ―after-tax‖ approach to decision making?
2|P a g e
1
,Solutions to Review Questions
R1-1 Once profit is determined, the Income Tax Act determines the amount of income tax that
results. However, at all levels of management, alternative courses of action are evaluated. In
3|P a g e
many cases, the choice of one alternative over the other may affect both the amount and the
timing of future taxes on income generated from that activity. Therefore, the person making
those decisions has a direct input into future after-tax cash flow. Obviously, decisions that reduce
or postpone the payment of tax affect the ultimate return on investment and, in turn, the value of
the enterprise. Including the tax variable as a part of the formal decision process will ultimately
lead to improved after-tax cash flow.
R1-2 Expansion can be achieved in new geographic areas through direct selling, or by
establishing a formal presence in the new territory with a branch office or a separate corporation.
The new territories may also cross provincial or international boundaries. Provincial income tax
rates vary amongst the provinces. The amount of income that is subject to tax in the new
province will be different for each of the three alternatives mentioned above. For example, with
direct selling, none of the income is taxed in the new province, but with a separate corporation,
all of the income is taxed in the new province. Because the tax cost is different in each case,
taxation is a relevant part of the decision and must be included in any cost-benefit analysis that
compares the three alternatives [Reg. 400-402.1].
R1-3 A basic understanding of the following variables will significantly strengthen a decision
maker's ability to apply tax issues to their area of responsibility.
Types of Income - Employment, Business, Property, Capital gains Taxable Entities
- Individuals, Corporations, Trusts
Alternative Business - Corporation, Proprietorship, Partnership, Limited
Structures partnership, Joint arrangement, Income trust Tax Jurisdictions - Federal,
Provincial, Foreign
, R1-4 All cash flow decisions, whether related to revenues, expenses, asset acquisitions or
divestitures, or debt and equity restructuring, will impact the amount and timing of the tax cost.
Therefore, cash flow exists only on an after tax basis, and, the tax impacts whether or not the
ultimate result of the decision is successful. An after-tax approach to decision- making requires
each decision-maker to think "after-tax" for every decision at the time the decision is being
made, and, to consider alternative courses of action to minimize the tax cost, in the same way
that decisions are made regarding other types of costs.
Failure to apply an after-tax approach at the time that decisions are made may provide inaccurate
information for evaluation, and, result in a permanently inefficient tax structure.
4|P a g e
2
Stuvia.com - The Marketplace to Buy and Sell your Study Material
CHAPTER 2
FUNDAMENTALS OF TAX PLANNING
Review Questions
1. ―Tax planning and tax avoidance mean the same thing.‖ Is this statement true? Explain.
