X Ltd. is a GST registrant. At the end of last year, the class 10.1 UCC balance was $24,500. In the current year, X Ltd. disposed of the class 10.1 car for $28,000. The car had originally cost $33,000 plus GST and PST at 7%.At the same time, X Ltd. purchased a new car costing $38,000 plus GST and PST at 7%.
Determine the income tax implications for X Ltd. for the current year. How would your answer change if X Ltd. was an HST registrant? Income tax reference: ITA: 13 (7)(g); 20(1)(a),20(16.1); Reg. 1101(1af), 1100(2.5), 7307.