Basic information about capital cost allowance (CCA)

Determining capital cost

Capital cost is the amount on which you first claim capital cost allowance. The capital cost of a property is usually the total of the following:

  • the purchase price (not including the cost of land, which is not depreciable)
  • the part of your legal, accounting, engineering, installation, and other fees that relate to buying or constructing the property (not including the part that applies to land)
  • the cost of any additions or improvements you made to the property after you acquired it, if you did not claim these costs as a current expense (such as modifications to accommodate persons with disabilities)
  • for a building, soft costs (such as interest, legal and accounting fees, and property taxes) related to the period you are constructing, renovating, or altering the building, if these expenses have not been deducted as current expenses

Determining CCA

There are a few other things you should know about capital cost allowance (CCA):

  • To decide whether an amount is a current expense or a capital expense, go to Current or capital expenses.
  • For the most part, use the declining balance method to calculate your CCA, as it is the most common one. This means that you apply the CCA rate to the capital cost. Over the life of the property, the rate is applied against the remaining balance. The remaining balance declines each year that you claim CCA.


Last year, Abeer bought a building for $60,000 to use in her business. On her tax return for last year, she claimed CCA of $1,200 on the building. This year, Abeer bases her CCA claim on her balance of $58,800 ($60,000  $1,200).

  • You do not have to claim the maximum amount of CCA in any given year. You can claim any amount you like, from zero to the maximum allowed for the year. If you do not have to pay income tax for the year, you may not want to claim CCA. Claiming CCA reduces the balance of the class by the amount of CCA claimed. As a result, the amount of CCA available for you to claim in future years will be reduced.
  • In the year you acquire a depreciable property, you can usually claim CCA only on one-half of your net additions to a class. This is called the half-year rule.
  • You cannot claim CCA on most land or on living things such as trees, shrubs, or animals. However, you can claim CCA on timber limits, cutting rights, and wood assets.
  • If you claim CCA and you later dispose of the property, you may have to add an amount to your income as a recapture of CCA. Alternatively, you may be able to deduct an additional amount from your income as a terminal loss.
  • If you receive income from a quarry, sand, or gravel pit, or a woodlot, you can claim a type of allowance known as a "depletion allowance."
  • If you are a partner in a partnership, you cannot separately claim CCA for depreciable property owned by the partnership. Instead, the partnership can deduct CCA when calculating its net income or loss for the year. The partnership's net income or loss is then allocated between the partners and each partner's share is shown on their respective slip T5013, Statement of Partnership Income. If the partnership does not need to file a partnership information return, you will not get a T5013 slip. In such cases, you will have to complete Area A of form T2042 to report the CCA claim for the partnership.

First fiscal period is less than 365 days

If your fiscal period is less than 365 days, you have to prorate your CCA claim. Calculate your CCA using the rules discussed in How to calculate the deduction for capital cost allowance (CCA). However, base your CCA claim on the number of days in your fiscal period compared to 365 days.


John starts a business on June 1st and his first fiscal period ends on December 31st. He calculates his CCA to be $3,500.

Since John's fiscal period is only 214 days, the amount of CCA he can claim is limited to $2,052 ($3,500 × 214/365).

Report a problem or mistake on this page
Please select all that apply:

Thank you for your help!

You will not receive a reply. For enquiries, contact us.

Date modified: