Generally,if the asset's CCA deductions are ________ its lease payments,a true tax lease is ________ if the lessor is in a higher tax bracket than the lessee.
A) more rapid than; advantageous
B) more rapid than; disadvantageous
C) slower than; advantageous
D) equal to; advantageous

Question

Quizplus · Accepted Answer

When the asset's Capital Cost Allowance (CCA) deductions are more rapid than its lease payments, a true tax lease is advantageous if the lessor is in a higher tax bracket than the lessee. This is because the lessor can take advantage of the rapid depreciation to reduce taxable income more quickly, which is more beneficial when in a higher tax bracket.

Generally,if the Asset's CCA Deductions Are ________ Its Lease Payments,a