Canadian Income Taxation, 2023/2024: Planning and Decision Making 26th Edition By William Buckwold

Canadian Income Taxation, 2023/2024:
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Planning and Decision Making 26 rv rv rv rv




th Edition rv




By William Buckwold rv rv




Complete Chapter Solutions Manual ar
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e 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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, Buckwold, Kitunen, Roman and Iqbal, Canadian Income Taxation, 2023-2024 Ed.
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CHAPTER 1 rv




TAXATION― ITS ROLE IN BUSINESS DECISION MAKINGrv rv rv rv rv rv




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




2. Most business decisions involve the evaluation of alternative courses of action. For exa
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mple, a marketing manager may be responsible for choosing a strategy for establishing
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sales in new geographical territories. Briefly explain how the tax factor can be an integral p
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art 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 respon
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sibility?

4. What is an “after-tax” approach to decision making?
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. 1
Instructor Solutions Manual Chapter One
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, Buckwold, Kitunen, Roman and Iqbal, Canadian Income Taxation, 2023-2024 Ed.
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Solutions to Review Questions
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R1-
1 Once profit is determined, the Income Tax Act determines the amount of income tax th
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at results. However, at all levels of management, alternative courses of action are evaluat
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ed. In many cases, the choice of one alternative over the other may affect both the amount
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and the timing of future taxes on income generated from that activity. Therefore, the pers
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on making those decisions has a direct input into future after-
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tax cash flow. Obviously, decisions that reduce or postpone the payment of tax affect the
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vultimate return on investment and, in turn, the value of the enterprise. Including the tax v
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ariable as a part of the formal decision process will ultimately lead to improved after-
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tax cash flow. rv rv




R1-
2 Expansion can be achieved in new geographic areas through direct selling, or by establ
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ishing a formal presence in the new territory with a branch office or a separate corporatio
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n. The new territories may also cross provincial or international boundaries. Provincial inc
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ome tax rates vary amongst the provinces. The amount of income that is subject to tax in
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vthe new province will be different for each of the three alternatives mentioned above. For
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vexample, with direct selling, none of the income is taxed in the new province, but with a s
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eparate corporation, all of the income is taxed in the new province. Because the tax cost i
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s different in each case, taxation is a relevant part of the decision and must be included in a
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ny cost-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
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maker's ability to apply tax issues to their area of responsibility.
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Types of Income rv rv -

Employment, Business, Property, Capital gains Ta rv rv rv rv rv




xable Entities rv - Individuals, Corporations, Trusts rv rv




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


uctures partnership, Joint arrangement, Income trust rv rv rv rv




Tax Jurisdictions rv - Federal, Provincial, Foreign rv rv




R1-
4 All cash flow decisions, whether related to revenues, expenses, asset acquisitions or di
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vestitures, or debt and equity restructuring, will impact the amount and timing of the tax c
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ost. Therefore, cash flow exists only on an after tax basis, and, the tax impacts whether or n
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ot the ultimate result of the decision is successful. An after-
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tax approach to decision-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
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vcourses of action to minimize the tax cost, in the same way that decisions are made rega
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rding other types of costs.
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Failure to apply an after- rv rv rv rv


tax approach at the time that decisions are made may provide inaccurate information
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vfor evaluation, and, result in a permanently inefficient tax structure.
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, Buckwold, Kitunen, Roman and Iqbal, Canadian Income Taxation, 2023-2024 Ed.
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CHAPTER 1 rv




TAXATION― ITS ROLE IN BUSINESS DECISION MAKING
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. 2
Instructor Solutions Manual Chapter One
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