A firm has just purchased a vehicle for $100 000. The CCA rate for this vehicle is 40%. The firm's corporate tax rate is 50%. What would be the firm's tax savings due to the CCA by the end of the first year?

Question

Quizplus · Accepted Answer

The Capital Cost Allowance (CCA) for the first year is 40% of $100,000, which is $40,000. The tax savings is the CCA multiplied by the tax rate: $40,000 * 50% = $20,000.

A Firm Has Just Purchased a Vehicle for $100 000