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

Canadian Income Taxation, 2026/2027
r r r




PlanningandDecisionMakin r r r




g 26th Edition r r




By William Buckwold
r r




CompleteChapterSolutionsManua r r r




l are included (Ch 1 to 23)
r r r r r r




** Immediate Download
r r




** Swift Response
r r




** All Chapters included
r r r




** Excel Solutions
r r

,CHAPTER 1 r




TAXATION― ITS ROLE IN BUSINESS DECISION MAKING r r r r r r




Review Questions
r




1. If income tax is imposed after profits have been determined, why is taxation relevant to busin
r r r r r r r r r r r r r r r



ess decision making?
r r




2. Most business decisions involve the evaluation of alternative courses of action. For example,
r r r r r r r r r r r r r



a marketing manager may be responsible for choosing a strategy for establishing sales in new
r r r r r r r r r r r r r r r



geographical territories. Briefly explain how the tax factor can be an integral part of this decisi
r r r r r r r r r r r r r r r



on.

3. What are the fundamental variables of the income taxsystem that decision-
r r r r r r r r r r r



makers should be familiar with so that they can apply tax issues to their areas of responsibilit
r r r r r r r r r r r r r r r r



y?

4. What is an “after-tax” approach to decision making?
r r r r r r r

, . 1
Instructor Solutions Manual Chapter One
r r r r

, CHAPTER 1 r




Solutions to Review Questions r r r




TAXATION― ITS ROLE IN BUSINESS DECISION MAKING r r r r r r


R1-
1 Once profit is determined, the Income Tax Act determines the amount of income tax that resul
r r r r r r r r r r r r r r r r



ts. However, at all levels of management, alternative courses of action are evaluated. In many c
r r r r r r r r r r r r r r r



ases, the choice of one alternative over the other may affect both the amount and the timing of fu
r r r r r r r r r r r r r r r r r r



ture taxes on income generated from that activity. Therefore, the person making those decisio
r r r r r r r r r r r r r



ns has a direct input into future after-
r r r r r r r



tax cash flow. Obviously, decisions that reduce or postpone the payment of tax affect the ultim
r r r r r r r r r r r r r r r



ate return on investment and, in turn, the value of the enterprise. Including the tax variable as a
r r r r r r r r r r r r r r r r r



part of the formal decision process will ultimately lead to improved after-tax cash flow.
r r r r r r r r r r r r r r




R1-
2 Expansion can be achieved in new geographic areas through direct selling, or by establishing
r r r r r r r r r r r r r r



a formal presence in the new territory with a branch office or a separate corporation. The new t
r r r r r r r r r r r r r r r r r r



erritories may also cross provincial or international boundaries. Provincial income tax rates v
r r r r r r r r r r r r



ary amongst the provinces. The amount of income that is subject to tax in the new province will
r r r r r r r r r r r r r r r r r



be different for each of the three alternatives mentioned above. For example, with direct sellin
r r r r r r r r r r r r r r r



g, none of the income is taxed in the new province, but with a separate corporation, all of the inc
r r r r r r r r r r r r r r r r r r r



ome is taxed in the new province. Because the tax cost is different in each case, taxation is a releva
r r r r r r r r r r r r r r r r r r r



nt part of the decision and must be included in any cost-
r r r r r r r r r r r



benefit analysis that compares the three alternatives [Reg. 400-402.1].
r r r r r r r r




R1-
3 A basic understanding of the following variables will significantly strengthen a decision ma
r r r r r r r r r r r r r



ker's ability to apply tax issues to their area of responsibility.
r r r r r r r r r r




Types of Income r r -

Employment, Business, Property, Capital gains Taxa r r r r r




ble Entities r - Individuals, Corporations, Trusts r r




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




uctures partnership, Joint arrangement, Income trust r r r r




Tax Jurisdictions r - Federal, Provincial, Foreign r r




R1-
4 All cash flow decisions, whether related to revenues, expenses, asset acquisitions or divestit
r r r r r r r r r r r r r



ures, or debt and equity restructuring, will impact the amount and timing of the tax cost. There
r r r r r r r r r r r r r r r r



fore, cash flow exists only on an after tax basis, and, the tax impacts whether or not the ultimate
r r r r r r r r r r r r r r r r r r r



result of the decision is successful. An after-tax approach to decision-
r r r r r r r r r r



making requires each decision-maker to think "after- r r r r r r



tax" for every decision at the time the decision is being made, and, to consider alternative cours
r r r r r r r r r r r r r r r r



es of action to minimize the tax cost, in the same way that decisions are made regarding other t
r r r r r r r r r r r r r r r r r r