Solution Manual for Canadian Income Taxation 2023/2024 26th Edition by William Buckwold ISBN:9780070876606 COMPLETE GUIDE WITH RATIONALES 100% VERIFIED A+ GRADE ASSURED!!!!!NEW LATEST UPDATE

, Buckwold, Kitunen, Roman and Iqbal, Canadian Income Taxation, 2023-2024 Ed.
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CHAPTER1 li




TAXATION― ITSROLE IN BUSINESSDECISION MAKING li li li li li li




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




2. Most business decisions involve the evaluation of alternative courses of action. For example, a
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marketing manager may be responsible for choosing a strategy for establishingsalesinnewge
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ographicalterritories.Brieflyexplainhowthetaxfactorcanbe an integral part of this decision.
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3. Whatarethefundamentalvariablesoftheincometaxsystemthatdecision-
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makersshould 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” approachto decision making?
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Copyright © 2023 McGraw Hill Ltd.
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Instructor Solutions Manual Chapter One
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, Buckwold, Kitunen, Roman and Iqbal, Canadian Income Taxation, 2023-2024 Ed. li li li li li li li li li




Solutions to Review Questions li li li




R1-
1 Once profit is determined, the Income Tax Act determines the amount of income tax that result
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s. However, at all levels of management, alternative courses of action are evaluated. Inmanycas
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es,thechoiceofonealternativeovertheothermayaffectboththeamountand the timing of future ta
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xes on income generated from that activity. Therefore, the person making those decisions has a
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direct input into future after- li li li li




tax cash flow. Obviously, decisions that reduce or postpone the payment of tax affect the ultimat
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e return on investment and, in turn, the value of the enterprise. Including the tax variable as a part
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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 establishing
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a formal presence in the new territory with a branch office or a separate corporation. The new terr
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itories may also cross provincial or international boundaries. Provincial income tax rates vary a
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mongst the provinces. The amount of income that is subject to tax in the new province will be diffe
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rent for each of the three alternatives mentioned above. For example, with direct selling, none of
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the income is taxed in the new province, but with a separate corporation, all of the income is taxed
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in the new province. Becausethetaxcostisdifferentineachcase,taxationisarelevantpartofthed
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ecisionand must be included in any cost- li li li li li li li




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




R1-
3 A basic understanding of the following variables will significantly strengthen a decision make
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r's ability to apply tax issues to their area of responsibility.
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Types of Income li li -

Employment,Business,Property,Capitalgains Taxa li li li li li




ble Entities li - Individuals, Corporations, Trusts li li




Alternative Business li -
Corporation,Proprietorship,Partnership,Limited Struc li li li li




tures partnership, Joint arrangement, Income trust li li li li




Tax Jurisdictions li - Federal,Provincial,Foreign li li




R1-
4 All cash flow decisions, whether related to revenues, expenses, asset acquisitions or divestitu
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res, or debt and equity restructuring, will impact the amount and timing of the tax cost.Therefore,
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cashflowexistsonlyonanaftertaxbasis,and,thetaximpactswhetheror not the ultimate result
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of the decision is successful. An after-tax approach to decision-
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making requires each decision-maker to think "after- li li li li li li




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 type
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s of costs.
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Failure to apply an after- l i li li li




tax approach at the time that decisions are made may provide inaccurate information for evaluation, a
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nd, result in a permanently inefficient tax structure.
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Instructor Solutions Manual Chapter One
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, Buckwold, Kitunen, Roman and Iqbal, Canadian Income Taxation, 2023-2024 Ed.
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CHAPTER1 li




TAXATION― ITSROLE IN BUSINESSDECISION MAKING
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Copyright © 2023 McGraw Hill Ltd.
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Instructor Solutions Manual Chapter One
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