Solution Manual for Canadian Income Taxation 26th Edition by William Buckwold ISBN:9780070876606 All Chapters Fully Covered Complete Newest Version

Solution Manual for Canadian Income Taxation
26th Edition by William Buckwold
All chapters 1-23 Covered

,TABLEOFCONTENT P7 P7




Chapter 1 Taxation Its Role in Decision Making Chapter 2
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Fundamentals of Tax Planning
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Chapter 3 Liability for Tax, Income Determination, and Administration of the Income Tax System Chapter 4 Inc
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ome from Employment P7 P7




Chapter 5 Income from Business P7 P7 P7 P7




Chapter 6 The Acquisition, Use, and Disposal of Depreciable Property Chapter 7 I
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ncome from Property P7 P7




Chapter 8 Gains and Losses on the Disposition of Capital Property-Capital Gains
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Chapter 9 Other Income, Other Deductions, and Special Rules for Completing Net Income for Tax Purposes Chapte
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r 10 Individuals: Determination of Taxable Income and Taxes Payable
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Chapter 11 Corporations-An Introduction P7 P7 P7




Chapter 12 Organization, Capital Structures, and Income Distributions of Corporations Chapter 13 T
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he Canadian-Controlled Private Corporation
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Chapter 14 Multiple Corporations and Their Reorganization Chapter 15
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Partnerships
Chapter 16 Limited Partnerships and Joint Ventures Chap
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ter 17 Trusts P7 P7




Chapter 18 Business Acquisitions and Divestitures-
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Assets versus Shares Chapter 19 Business Acquisitions and Divestitures-Tax-
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Deferred Sales Chapter 20 Domestic and International Business Expansion
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Chapter 21 Tax Aspects of Corporate Financing Chapter 2
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2 Introduction to GST/HST
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Chapter 23 Business Valuations P7 P7 P7




Chapter 1 P7




Taxation – It’s Role in Business Decision Making P7 P7 P7 P7 P7 P7 P7




Review Questions P7




1. If income tax is imposed after profits have been determined, why is taxation relevant to
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business decision making? P7 P7




2. Most business decisions involve the evaluation of alternative courses of action. For example, a ma
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rketing manager may be responsible for choosing a strategy for establishing sales in new ge
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ographical territories. Briefly explain how the tax factor can be an integral part of this decision.
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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 responsibility?
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4. What is an “after-tax” approach to decision making?
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,Solutions to Review Questions
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1 Once profit is determined, the Income Tax Act determines the amount of income tax that
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P results. However, at all levels of management, alternative courses of action are evaluated. In m
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any 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 de
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cisions has a direct input into future after-P 7 P 7 P 7 P 7 P 7 P 7 P 7




tax cash flow. Obviously, decisions that reduce or postpone the payment of tax affect the ultim
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ate return on investment and, in turn, the value of the enterprise. Including the tax variable as a p
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art of the formal decision process will ultimately lead to improved after-tax cash flow.
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2 Expansion can be achieved in new geographic areas through direct selling, or by establishing a for
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mal presence in the new territory with a branch office or a separate corporation. The new territori
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es may also cross provincial or international boundaries. Provincial income tax rates vary amongst
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the provinces. The amount of income that is subject to tax in the new province will be different f
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or each of the three alternatives mentioned above. For example, with direct selling, none of the i
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ncome is taxed in the new province, but with a separate corporation, all of the income is taxe
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d in the new province. Because the tax cost is different in each case, taxation is a relevant
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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 maker'
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s ability to apply tax issues to their area of responsibility.
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Types of Income P7 P7 -

Employment, Business, Property, Capital gains Taxa P7 P7 P7 P7 P 7




ble Entities P7 - Individuals, Corporations, Trusts P7 P7




Alternative Business P7 -
Corporation, Proprietorship, Partnership, Limited Struct P7 P7 P7 P 7




ures partnership, Joint arrangement, Income trust P7 P7 P7 P7




Tax Jurisdictions P7 - Federal, Provincial, Foreign P7 P7




R1-
4 All cash flow decisions, whether related to revenues, expenses, asset acquisitions or div
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estitures, or debt and equity restructuring, will impact the amount and timing of the tax cost.
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Therefore, cash flow exists only on an after tax basis, and, the tax impacts whether or not the ultim
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ate result of the decision is successful. An after-tax approach to decision-
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P 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 course
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s of action to minimize the tax cost, in the same way that decisions are made regarding other types o
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f costs.
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Failure to apply an after- P 7 P 7 P 7 P 7




tax approach at the time that decisions are made may provide inaccurate information for eva
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luation, and, result in a permanently inefficient tax structure.
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, CHAPTER2 P
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FUNDAMENTALS OF TAXPLANNING P7 P
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Review Questions
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1. “Tax planning and tax avoidance mean the same thing.” Is this statement true? Explain.
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2. What distinguishes tax evasion from tax avoidance and tax planning?
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3. Does Canada Revenue Agency deal with all tax avoidance activities in the same way? Explain.
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4. The purpose of tax planning is to reduce or defer the tax costs associated with financial
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7transactions. What are the general types of tax planning activities? Briefly explain how each of t P7 P7 P7 P7 P7 P7 P7 P7 P7 P7 P7 P7 P7 P 7 P7




hem may reduce or defer the tax cost.
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5. “It is always better to pay tax later rather than sooner.” Is this statement true? Explain.
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6. When corporatetax rates are13% and t axrates for individuals are40%, is it always better for the indiv
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idual to transfer their business to a corporation?
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7. “As long as all of the income tax rules are known, a tax plan can be developed with
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certainty.” Is this statement true? Explain. P7 P7 P7 P7 P7




8. What basic skills are required to develop a good tax plan?
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9. An entrepreneur is developing a new business venture and is planning to raise equity cap
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ital from individual investors. Their adviser indicates that the venture could be structure
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d as a corporation (i.e., shares are issued to the investors) or as a limited partnership (i.e., pa
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rtnership units are sold). Both structures provide limited liability for the investors. Should the e
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ntrepreneur consider the tax positions of the individual investors? Explain. Without dealing
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with specific tax rules, what general tax factors should an investor consider before making an in
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vestment?

10. What is a tax avoidance transaction? P7 P7 P7 P7 P7




11. “If a transaction (or a series of transactions) that results in a tax benefit was not undertaken pri
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marily for bona fide business, investment, or family purposes, the general anti-
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P avoidance rule will apply and eliminate the tax benefit.” Is this statement true? Explain.
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