Question

Which of the following is NOT correct with respect to CCA Class​ 10.1?

A. Disposition of passenger vehicles out of Class 10.1 cannot result in recapture or terminal​ loss, instead one-half of the CCA calculated is allowed as a deduction.
B. This is the CCA class for passenger vehicles with a cost in excess of​ $30,000.
C. A separate Class 10.1 is required for each passenger vehicle with a cost in excess of​ $30,000.
D. Disposition of passenger vehicles out of Class 10.1 can result in recapture or terminal loss.

Answer 1

The correct answer is D. Disposition of passenger vehicles out of Class 10.1 can result in recapture or terminal loss.

Step-by-step explanation:

The correct option is D. Disposition of passenger vehicles out of Class 10.1 can result in recapture or terminal loss.

CCA stands for Capital Cost Allowance, and it is a Canadian tax term that allows businesses to write off the cost of certain assets over a period of time.

Class 10.1 refers specifically to passenger vehicles with a cost in excess of $30,000.

Option D is incorrect because disposition of passenger vehicles out of Class 10.1 can indeed result in recapture or terminal loss. Recapture occurs when the proceeds from the disposition are greater than the undepreciated capital cost (UCC) allocated to that class.

Terminal loss occurs when the proceeds are less than the UCC allocated to the class. Both recapture and terminal loss can affect the business's tax liability.