ICANTaxationCapital Gains Tax2024

Roll-over relief on the replacement of business assets has the effect of:

AExempting the gain permanently
BDeferring the gain by reducing the cost of the replacement assetCORRECT
CReducing the rate of tax to 5%
DConverting the gain into trading income
AI
Toaster Teacher
Why the answer is B, and why the others tempt you.
Where proceeds are reinvested in a qualifying replacement asset, the gain is not taxed immediately but is deducted from the cost of the new asset, so the tax is deferred until the replacement is itself disposed of.
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