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the first question in the DEC 2009 paper.
why the leasing cash flow analysis must calculate the tax savings, what’s the tax saving means, i means that i don’t know why the leasing decision can results in tax saving.
and in the purchase analysis, why the tax benefit is including the license fee benefit, is there any benefit can claim if purchasing?
My understanding is that when you are leasing something you are loosing capital allowance but you can write off tax so that’s why it is saving for you.
For the second question I am not sure to the end as well, when I was doing question myself I did wrong deducting tax. I just try to remember this kind of situation when it will be on the exam, 🙂
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it is about F6 taxation : deductible expense.
eg, the purchase of lic is deductible expense, so, you could deduct tax 30% less of lic fee. It means the cash-flow will add that amount as tax benefit.
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