A number of terms are listed below:
Adjusted cost base (ACB)......... amortization
Capital cost allowance (CCA)....... capital gain
Capital loss.............. eligible capital expenditure
Eligible capital property......... excess present value index
Half-year rule.............. marginal income tax rate
Recapture of UCC..... unamortized capital cost allowance (UCC)
Select the terms from the above list to complete the following sentences.
It is the ________ ______ ___ ____ that is important for planning investments because CRA income tax rates are progressive. It is the calendar year that is important to CRA, not the corporate fiscal year. All dispositions of ________ _______ ________ must be reported in the calendar year the transaction occurred. Tax law on eligible capital property is both complex and highly detailed. Financial accountants signal the decline in capacity of a long-term asset to gen erate revenue using one of three methods of ____________. The CRA, however, has tax laws requiring companies to deduct _______ ____ _________ (___) from the ________ _______ ___________ made on an eligible capital property. Irrespective of when an eligible capital expenditure is made in a year, the _________ ____ means only half of the CCA can be deducted from taxable income in the year of acquisition of an eligible capital property. CRA calls the acquisition cost an _________ ____ ____ (___). When an eligible capital property is sold for more than the adjusted cost base plus sales expenses, the difference is a _______ ____. Once the exemption on taxable capital gains has been taken in full, CRA taxes 50% of the capital gain reported in the calendar year. If the property is sold for less than the adjusted cost base plus sales expenses, the difference is a _______ ____. Up to 50% of a capital loss can be deducted from a taxable capital gain for the same year. The ____________ _______ _____________ (___) is the relevant amount for calculating either a ________ ____ or a _________ __ ___. If the eligible capital property is the last of its class to be disposed of, there is a special calculation to determine if there is either a terminal loss or a recapture of unamortized UCC. Any recapture of UCC is reported as normal taxable income. Any terminal loss can be 100% deducted from income for the year. After adjusting cash flow for tax considerations the ______ _______ _____ _____is calculated by dividing the present value of future net cash inflows by the present value of the initial investment. The index measures the cash flow return per dollar invested.