RUBICON is being used by both purchasers and sellers of tax depreciable assets to compare the after-tax cash flows resulting from:
- paying cash
- financing some or all of the asset cost (including sales taxes)
- leasing with a “Joint Election”, in cases where both a lessor and lessee may qualify for claiming Capital Cost Allowance (CCA)
RUBICON can also be used in evaluating the after-tax cash flows which would result from a proposed “Sale/Leaseback” of an asset.
How does RUBICON work?
RUBICON analyzes the cash flows from each of the above options and matches them with the tax status of the purchaser to produce after-tax cash flows. Each of these cash flows is discounted at a designated rate, on an after-tax basis, to generate present values. The lowest present value represents, from a financial perspective, the purchaser’s best available option .
How is RUBICON different?
RUBICON is an objective measurement system that does not manipulate cash flows to favour any one option. Because of the current tax and financial circumstances of a purchaser, every transaction is likely to have a different outcome. This is what RUBICON measures.