 | This article does not cite any sources. Please help improve this article by adding citations to reliable sources. Unsourced material may be challenged and removed. Find sources: "Capital cost tax factor" – news · newspapers · books · scholar · JSTOR (August 2010) (Learn how and when to remove this message) |
The capital cost tax factor (CCTF) is a calculated value summarising the benefit in future tax savings due to Capital Cost Allowance (CCA) in Canada.
CCTF allows analysts to take these benefits into account when calculating the present value of an asset. The CCTF is a constant, that is a function of the Capital Cost Allowance rate, the interest rate, and the tax rate. CCTF allows the analyst to find the present value independently of the initial cost of the asset.
Calculation
There are two ways to calculate CCTF. The older method was replaced on November 13, 1981, but is still used for assets purchased before that date.
Capital Cost Tax Factor = 1 -（td) /(i+d);
t= tax rate; i= interest rate; d= capital cost allowance;
 | This tax-related article is a stub. You can help Misplaced Pages by expanding it. |