Homework Answers
Details provided : Current value of car = 220000, original price : 45000, years = 40 yrs, CCA Rate = 30%. tax rate = 28%
Current salvage value of car after depreciation = 45000 * (1-CCA Rate) ^ no of years
Current salvage value = 0.028
Hence the car has been completely depreciated.
depreciated amount = price of the car = 45000
Tax benefit from depreciation = 28% * 45000 = 12600
Current sales value = 220000
Capital gains = current price - original price = 175000
Capital gains tax = 28% * capital gains = 49000
Since the company has to pay capital gains tax, hence there is capital gains tax
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