The Capital Cost Allowance (CCA)tax Shield of a Class 7

question 128

Multiple Choice

The capital cost allowance (CCA) tax shield of a Class 7 asset with a maximum 15% CCA rate was $12,000 for Year 2.The income tax rate was 40%.What was the total CCA deduction for the asset for Year 2?

• A) $12,000.
• B) $20,000.
• C) $30,000.
• D) $80,000.

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Definitions:

Tax Base

The thing that is taxed. Generally income, wealth, or consumption.

Marital Status

This denotes whether someone is married, single, divorced, widowed, or has another state of marital connection as recognized by law.

Income

Income refers to the money received by an individual or business for work, from investments, or from various sources over a period, typically used to fund expenses.

Wealth

An abundance of valuable possessions or money, or the total market value of all physical and intangible assets owned by an individual, community, company, or country, minus all debts.