variables Major of the Income Tax Act that have an impact on the business decision process: o Taxpayers There are only 3 entities subject to tax in Canada o Types of income Each of the taxpayer entities can earn five types of income, of which four have general application to business activity o Business structure There are 6 basic forms of organization in which a business activity can take place. Of the 6, only 3 are directly subject to tax o Tax jurisdictions A Canadian business is normally subject to 2 taxation authorities, unless it extends its operations to international markets * Interaction among these variables are important * When the variable are changed in each of the major categories, tax alternative structures are created that can then be applied to the decision process * Equity capital is services by dividend distributions, which are not deductible by the payer and constitute property income taxed in a certain way to the investor * Debt capital is serviced by interest payments, which are deductible by the payer and constitute property income to the recipient * Employment income is subject to a completely different set of general rules form business income * Corporate tax rates differ from individual tax rates * The areas of tax law that apply to the internal day-to-day decisions of the business enterprise are among the least affected by the annual changes in federal budgets