Question

The capital cost allowance​ (CCA) deduction for any given taxation year is​ ________.

A. equal to the amount of depreciation and amortization claimed on its financial accounting reports for the year
B. an optional amount equal to any selected amount that is less than or equal to the maximum CCA as prescribed in the Income Tax Act
C. reduced by the cost of assets that have been sold or otherwise disposed of
D. not an optional amount and is equal to its undepreciated capital cost​ (UCC) balance multiplied by the prescribed rate indicated in the Income Tax Act

Answer 1

The capital cost allowance (CCA) for a taxation year is an optional amount that a taxpayer can claim, up to the maximum allowed by the Income Tax Act. It's not tied to financial report depreciation and can be adjusted based on asset disposals.

Step-by-step explanation:

The capital cost allowance (CCA) deduction for any given taxation year is an optional amount equal to any selected amount that is less than or equal to the maximum CCA as prescribed in the Income Tax Act. This means that a taxpayer can claim less than the maximum CCA for a particular class of assets, which provides a certain degree of control over the taxable income reported. However, it is not necessarily equal to the amount of depreciation claimed on financial accounting reports. Furthermore, the CCA claimed in a year can be reduced by the proceeds from the disposal of assets in the same class, as these would decrease the class's undepreciated capital cost (UCC).