What is Capital Cost Allowance (CCA) and how do I claim it?

Capital Cost Allowance (CCA) is Canada's depreciation system for business assets — it allows you to deduct the cost of capital assets (equipment, vehicles, computers, furniture) over time, rather than all at once in the year of purchase. Each asset is assigned to a CCA class, each with its own depreciation rate: | CCA Class | Description | Rate | |---|---|---| | Class 8 | Furniture, equipment, machinery | 20% | | Class 10 | Vehicles costing ≤ C$36,000 | 30% | | Class 10.1 | Passenger vehicles costing > C$36,000 | 30% (limited) | | Class 12 | Computer software, tools < C$500 | 100% | | Class 50 | Computers and data processing | 55% | | Class 54 | Zero-emission vehicles | 30% (accelerated) | **Half-year rule:** In the year you purchase an asset, you can only claim half the normal CCA amount. **Accelerated Investment Incentive (AII):** Many assets purchased after November 2018 qualify for 1.5× the normal first-year CCA amount instead of the half-year rule. CCA is reported on the CCA table in Part 7 of Form T2125 and cannot create or increase a business loss.

  • CCA spreads the cost of capital assets over multiple years
  • Each asset assigned to a CCA class with its own rate
  • Class 50 (computers): 55% per year; Class 8 (equipment): 20%/year
  • Half-year rule applies in year of purchase (only half the rate)
  • Accelerated Investment Incentive: 1.5× first-year CCA for recent purchases

Related Questions

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