100% satisfaction guarantee Immediately available after payment Both online and in PDF No strings attached
logo-home
Solution Manual for Canadian Income Taxation 2024/2025 26th Edition by William Buckwold, Joan Kitunen, Matthew Roman, Abraham Iqbal ||Complete A+ Guide $17.99   Add to cart

Exam (elaborations)

Solution Manual for Canadian Income Taxation 2024/2025 26th Edition by William Buckwold, Joan Kitunen, Matthew Roman, Abraham Iqbal ||Complete A+ Guide

 12 views  0 purchase
  • Course
  • Solution Manual
  • Institution
  • Solution Manual

Solution Manual for Canadian Income Taxation 2024/2025 26th Edition by William Buckwold, Joan Kitunen, Matthew Roman, Abraham Iqbal ||Complete A+ Guide

Preview 4 out of 1081  pages

  • October 18, 2024
  • 1081
  • 2024/2025
  • Exam (elaborations)
  • Questions & answers
book image

Book Title:

Author(s):

  • Edition:
  • ISBN:
  • Edition:
  • Solution Manual
  • Solution Manual
avatar-seller
Ascorers
, Buckwold, liKitunen, liRoman liand liIqbal, liCanadian liIncome liTaxation, li2023-2024 liEd.

CHAPTER 1 li




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




Review Questions
li




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


business decision making?
li li li




2. Most business decisions involve the evaluation of alternative courses of action. For
li li li li li li li li li li li


example, a marketing manager may be responsible for choosing a strategy for
li li li li li li li li li li li li


establishing sales in new geographical territories. Briefly explain how the tax factor can be an
li li li li il il il li il il il li li il li


integral part of this decision.
li li li li li




3. What are the fundamental variables of the income tax system that decision-makers should be
il il il il il il il il li il li il li


familiar with so that they can apply tax issues to their areas of responsibility?
li li li li li li li li li li li li li li




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




Copyright li© li2023 liMcGraw liHill liLtd. 1
Instructor liSolutions liManual liChapter liOne

, Buckwold, liKitunen, liRoman liand liIqbal, liCanadian liIncome liTaxation, li2023-2024 liEd.


Solutions to Review Questions li li li




R1-1 Once profit is determined, the Income Tax Act determines the amount of income tax that
l i li li li li li li li li li li li li li li


results. However, at all levels of management, alternative courses of action are evaluated.
li li li li li li li li li li li li li


In many cases, the choice of one alternative over the other may affect both the amount and the
li li li li li li li li li li li li li li il li li li


timing of future taxes on income generated from that activity. Therefore, the person
li li li li li li li li li li li li li


making those decisions has a direct input into future after-tax cash flow. Obviously,
li li li li li li li li li li li li li


decisions that reduce or postpone the payment of tax affect the ultimate return on
li li li li li li li li li li li li li li


investment and, in turn, the value of the enterprise. Including the tax variable as a part of
li li li li li li li li li li li li li li li li li


the formal decision process will ultimately lead to improved after-tax cash flow.
li li li li li li li li li li li li




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


establishing a formal presence in the new territory with a branch office or a separate
li li li li li li li li li li li li li li li


corporation. The new territories may also cross provincial or international boundaries.
li li li li li li li li li li li


Provincial income tax rates vary amongst the provinces. The amount of income that is
li li li li li li li li li li li li li li


subject to tax in the new province will be different for each of the three alternatives
li li li li li li li li li li li li li li li li


mentioned above. For example, with direct selling, none of the income is taxed in the new
li li li li li li li li li li li li li li li li


province, but with a separate corporation, all of the income is taxed in the new province.
li li li li li li li li li li li li li li li li


Because the tax cost is different in each case, taxation is a relevant part of the decision and
li il il li il il li li li il il li li li li li il il


must be included in any cost-benefit analysis that compares the three alternatives [Reg.
li li li li li li li li li li li li li


400-402.1].
li




R1-3 A basic understanding of the following variables will significantly strengthen a
l i li li li li li li li li li li


decision maker's ability to apply tax issues to their area of responsibility.
li li li li li li li li li li li li




Types of Income li li - Employment, Business, Property, Capital gains li li li li




li Taxable Entities li - Individuals, Corporations, Trusts li li




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


Structures li 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
li li li li li li li li li li li li


divestitures, or debt and equity restructuring, will impact the amount and timing of the tax
li li li li li li li li li li li li li li li


cost. Therefore, cash flow exists only on an after tax basis, and, the tax impacts whether or
li li li li li li li li li li li li li li li li li


not the ultimate result of the decision is successful. An after-tax approach
li l i l i l i l i l i l i l i l i l i l i l i


to decision-making requires each decision-maker to think "after-tax" for every decision
l i l i li li li li li li li li li


at the time the decision is being made, and, to consider alternative courses of action to
li li li li li li li li li li li li li li li li


minimize the tax cost, in the same way that decisions are made regarding other types of
li li li li li li li li li li li li li li li li


costs. li




Failure to apply an after-tax approach at the time that decisions are made may provide
li li li li li li li li li li li li li li


inaccurate information for evaluation, and, result in a permanently inefficient tax structure.
li li li li li li li li li li li li




Copyright li© li2023 liMcGraw liHill liLtd. 2
Instructor liSolutions liManual liChapter liOne

, Buckwold, liKitunen, liRoman liand liIqbal, liCanadian liIncome liTaxation, li2023-2024 liEd.

CHAPTER 2 li




FUNDAMENTALS OF TAX PLANNING li li li




Review Questions
li




1. “Tax planning and tax avoidance mean the same thing.” Is this statement true? Explain.
li li li li li li li li li li li li li




2. What distinguishes tax evasion from tax avoidance and tax planning?
li li li li li li li li li




3. Does Canada Revenue Agency deal with all tax avoidance activities in the same way?
li li li li li li li li li li li li li


Explain.
li




4. The purpose of tax planning is to reduce or defer the tax costs associated with financial
li li li li li li li li li li li li li li li


transactions. What are the general types of tax planning activities? Briefly explain how
li li li li li li li li li li li li li


each of them may reduce or defer the tax cost.
li li li li li li li li li li




5. “It is always better to pay tax later rather than sooner.” Is this statement true? Explain.
li li li li li li li li li li li li li li li




6. When corporate tax rates are 13% and tax rates for individuals are 40%, is it always better for
il il il il li il li il il li li il il li il li li


the individual to transfer their business to a corporation?
li li li li li li li li li




7. “As long as all of the income tax rules are known, a tax plan can be developed with
li li li li li li li li li li li li li li li li li


certainty.” Is this statement true? Explain.
li li li li li li




8. What basic skills are required to develop a good tax plan?
li li li li li li li li li li




9. An entrepreneur is developing a new business venture and is planning to raise equity
li li li li li li li li li li li li li


capital from individual investors. Their adviser indicates that the venture could be
li li li li li li li li li li li li


structured as a corporation (i.e., shares are issued to the investors) or as a limited
li li li li li li li li li li li li li li li


partnership (i.e., partnership units are sold). Both structures provide limited liability for the
li li li li li li li li li li li li li


investors. Should the entrepreneur consider the tax positions of the individual investors?
li li li li li li li li li li li li


Explain. W ithout dealing with specific tax rules, what general tax factors should an investor
li il il il il il il il il il il il il il


consider before making an investment?
li li li li li




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




11. “If a transaction (or a series of transactions) that results in a tax benefit was not undertaken
il il il il il il il il il il il il il il il il


primarily for bona fide business, investment, or family purposes, the general anti-
li li li li li li li li li li li li


avoidance rule will apply and eliminate the tax benefit.” Is this statement true? Explain.
li li li li li li li li li li li li li li




Copyright li© li2023 liMcGraw liHill liLtd. 1
liInstructor liSolutions liManual liChapter liTwo

The benefits of buying summaries with Stuvia:

Guaranteed quality through customer reviews

Guaranteed quality through customer reviews

Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.

Quick and easy check-out

Quick and easy check-out

You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.

Focus on what matters

Focus on what matters

Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!

Frequently asked questions

What do I get when I buy this document?

You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.

Satisfaction guarantee: how does it work?

Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.

Who am I buying these notes from?

Stuvia is a marketplace, so you are not buying this document from us, but from seller Ascorers. Stuvia facilitates payment to the seller.

Will I be stuck with a subscription?

No, you only buy these notes for $17.99. You're not tied to anything after your purchase.

Can Stuvia be trusted?

4.6 stars on Google & Trustpilot (+1000 reviews)

79373 documents were sold in the last 30 days

Founded in 2010, the go-to place to buy study notes for 14 years now

Start selling
$17.99
  • (0)
  Add to cart