Solution manual for Canadian Income Taxation, 2026/2027: Planning and Decision Making 26th Edition By William Buckwold

Canadian Income Taxation, 2026/2027
Planning and Decision
Making 26th Edition
By William Buckwold

Complete Chapter Solutions Manua
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l are included (Ch 1 to 23)
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** Immediate Download
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** Swift Response
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** All Chapters included
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** Excel Solutions
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,CHAPTER 1 p




TAXATION― ITS ROLE IN BUSINESS DECISION MAKINGp p p p p p




Review Questions
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1. If income tax is imposed after profits have been determined, why is taxation relevant to bus
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iness decision making?
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2. Most business decisions involve the evaluation of alternative courses of action. For exampl
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e, a marketing manager may be responsible for choosing a strategy for establishing sales in
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new geographical territories. Briefly explain how the tax factor can be an integral part of this
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decision.

3. What are the fundamental variables of the income tax system that decision-
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makers should be familiar with so that they can apply tax issues to their areas of responsibil
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ity?

4. What is an “after-tax” approach to decision making?
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, . 1
Instructor Solutions Manual Chapter One
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, CHAPTER 1 p




Solutions to Review Questions
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TAXATION― ITS ROLE IN BUSINESS DECISION MAKING p p p p p p


R1-
1 Once profit is determined, the Income Tax Act determines the amount of income tax that res
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ults. However, at all levels of management, alternative courses of action are evaluated. In ma
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ny cases, the choice of one alternative over the other may affect both the amount and the timin
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g of future taxes on income generated from that activity. Therefore, the person making those
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decisions has a direct input into future after- p p p p p p p



tax cash flow. Obviously, decisions that reduce or postpone the payment of tax affect the ulti
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mate return on investment and, in turn, the value of the enterprise. Including the tax variabl
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e as a part of the formal decision process will ultimately lead to improved after-tax cash flow.
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R1-
2 Expansion can be achieved in new geographic areas through direct selling, or by establishi
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ng a formal presence in the new territory with a branch office or a separate corporation. The
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new territories may also cross provincial or international boundaries. Provincial income tax
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rates vary amongst the provinces. The amount of income that is subject to tax in the new pro
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vince will be different for each of the three alternatives mentioned above. For example, with
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direct selling, none of the income is taxed in the new province, but with a separate corporatio
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n, all of the income is taxed in the new province. Because the tax cost is different in each case, t
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axation is a relevant part of the decision and must be included in any cost-
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benefit analysis that compares the three alternatives [Reg. 400-402.1].
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R1-
3 A basic understanding of the following variables will significantly strengthen a decision m
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aker's ability to apply tax issues to their area of responsibility.
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Types of Income p p -

Employment, Business, Property, Capital gains Tax p p p p p




able Entities p - Individuals, Corporations, Trusts p p




Alternative Business p -
Corporation, Proprietorship, Partnership, Limited Str p p p p




uctures partnership, Joint arrangement, Income trust p p p p




Tax Jurisdictions p - Federal, Provincial, Foreign p p




R1-
4 All cash flow decisions, whether related to revenues, expenses, asset acquisitions or divesti
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tures, or debt and equity restructuring, will impact the amount and timing of the tax cost. Th
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erefore, cash flow exists only on an after tax basis, and, the tax impacts whether or not the ulti
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mate result of the decision is successful. An after-tax approach to decision-
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making requires each decision-maker to think "after-
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tax" for every decision at the time the decision is being made, and, to consider alternative cou
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rses of action to minimize the tax cost, in the same way that decisions are made regarding oth
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