Wai Yeung is a self-employed insurance saleswoman. She started her business on July 1, 20X1, and ended her first taxation year on December 31, 20X1. On July 1, 20X1, she purchased a car for $32,000 plus HST. The car is financed with a bank loan.

From July 1, 20X1, to December 31, 20X1, interest costs amounted to $1,960. Yeung incurred the following additional expenses relating to her automobile:

Repairs and maintenance …………   $ 300

Insurance………........…………………..   1,100

Gasoline ………….........………………     1,700

Parking while on business….......……. 420

During the period, Yeung drove 15,000 kilometres, of which 12,000 were for business.

Required:

1. Determine the maximum amount that Yeung can deduct from her business income for tax purposes in 20X1.

2. Calculate the maximum CCA that Yeung can deduct in 20X2 and 20X3, assuming that business kilometres driven and total kilometres driven both remain constant and that Yeung’s car is sold in 20X3 for $21,000 and replaced with a new car costing $34,000 plus HST.

3. Would your answers to 1 and 2 above change if Yeung were employed as an insurance saleswoman, rather than self-employed? Explain.