A Tax-Free Component and a Tax-Deferred Component Are Two Taxation

question 20

Multiple Choice

A tax-free component and a tax-deferred component are two taxation benefits associated with the income derived by a property. The tax-deferred component:

• A) derives from building depreciation allowances and provides for tax relief for a period of five years.
• B) derives from depreciation of furniture and fittings and provides tax relief for a period of seven years.
• C) derives from building depreciation allowances and the accumulated sum reduces the cost base of the property when it is sold.
• D) derives from depreciation of furniture and fittings and the accumulated sum adds to the cost base of the property when it is sold.

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