How to calculate the deduction for capital cost allowance (CCA)

The Capital cost allowance you can claim depends on the type of property you own and the date you acquired it.

You group the depreciable property you own into CRA classes of depreciable property. For an explanation of the most common classes of property, go to Classes of depreciable property. A specific rate of CCA generally applies to each class. For a list of most classes and their rates, go to CCA classes.

Base your CCA claim on your fiscal period ending in the current tax year and not the calendar year.

There are a few things you should know about CCA, such as the difference between a current and capital expense, the declining balance method, and the impact on the CCA of a fiscal period. For more information, go to Basic information about capital cost allowance (CCA).

To help calculate your current tax year deduction for CCA, and any recaptured CCA, as well as terminal losses, use:

• Form T2125, Statement of Business or Professional Activities, Area A
• Guide T4002, Self-employed Business, Professional, Commission, Farming, and Fishing Income

You may have acquired or disposed of buildings or equipment during the fiscal period. If so, see Area B, C, D or E, whichever applies, before completing Area A on Form T2125.

If you want to claim CCA under the immediate expensing rules and you are part of an associated group of eligible persons or partnerships, fill in Area G before completing Area A on Form T2125 to calculate the immediate expensing limit allocated to your business.

To calculate your CCA claim, you will need to know the meaning of:

• available for use
• capital cost
• depreciable property
• fair market value (FMV)
• non-arm's length transactions
• proceeds of disposition
• undepreciated capital cost (UCC)

Available for use

You can usually claim CCA on a property only when it becomes available for use.

Property other than a building usually becomes available for use on the earlier of:

• the date you first use it to earn income
• the second tax year after the year you acquire the property
• the time just before you dispose of the property
• the time the property is delivered or made available to you and is capable of producing a saleable product or service

A building or part of a building usually becomes available for use on the earlier of the following date:

• the date you start using 90% or more of the building in your business
• the second tax year after the year you acquire the building
• the time just before you dispose of the building

A building or part of a building that you are constructing, renovating, or altering usually becomes available for use on the earlier of:

• the date you complete the construction, renovation, or alteration
• the date you start using 90% or more of the building in your business
• the second tax year after the year you acquire the building
• the time just before you dispose of the building

Capital cost

This is the amount on which you first claim CCA. The capital cost of a property is usually the total of:

• 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

Proceeds of disposition

The proceeds of disposition are usually the amount you receive or that we consider you to have received for your property. This could include compensation you receive for property that has been damaged, expropriated, destroyed or stolen.

Special rules may apply if you dispose of a building for less than both its undepreciated capital cost and your capital cost. If this is the case, go to Disposing of a building in the year.

Forms and publications

• Guide T4002, Self-employed Business, Professional, Commission, Farming, and Fishing Income
• Form T2125, Statement of Business or Professional Activities
• Income Tax Folio S3-F4-C1, General Discussion of Capital Cost Allowance