What Is CCA (Capital Cost Allowance)?

Capital Cost Allowance (CCA) is the Canadian tax system's version of depreciation — it's the amount you can deduct each year from your taxable income for the wear and tear on business assets. Instead of writing off the full cost of an asset in the year you buy it, you deduct a portion each year over the asset's useful life.

How CCA Works

When you buy a fixed asset, you add it to the appropriate CCA class — a category assigned by the CRA that determines the annual deduction rate. Each year, you can claim up to the maximum CCA for each class.

Example:

You buy a $10,000 piece of equipment (Class 8 — 20% rate).

Year	Opening UCC	CCA Claimed (20%)	Closing UCC
1	$10,000	$1,000*	$9,000
2	$9,000	$1,800	$7,200
3	$7,200	$1,440	$5,760
...	...	...	...

*Year 1 uses the half-year rule — you can only claim half the normal CCA in the first year, regardless of when you bought the asset.

The Undepreciated Capital Cost (UCC) is the remaining value of the asset class on which future CCA can be claimed.

Common CCA Classes

Class	Rate	What's in it
Class 1	4%	Most buildings
Class 8	20%	Miscellaneous equipment, furniture, fixtures, most tools
Class 10	30%	Vehicles (general), data network infrastructure
Class 10.1	30%	Passenger vehicles over the cost limit ($37,000 in 2024) — separate class per vehicle
Class 50	55%	Computer hardware (purchased after March 18, 2007)
Class 14.1	5%	Goodwill and other intangible property

The CRA publishes the full class list in its CCA guide (T4002).

CCA Is Optional — and Strategic

CCA is not mandatory. You can claim less than the maximum in any year, or nothing at all. This flexibility makes CCA a tax planning tool:

If you have a profitable year, claiming more CCA reduces your taxable income
If you expect higher income next year, you might save the CCA claim for then
If you have a loss, claiming CCA could deepen the loss — your Mesa CPA advisor may recommend skipping it

Your Mesa CPA advisor determines the optimal CCA claim at year-end based on your income picture.

CCA vs. Amortization in Your Books

There's a distinction worth understanding:

Amortization is the accounting entry in QBO that reduces the asset's book value over time. Your Mesa CPA bookkeeper records this periodically (usually at year-end).

CCA is the tax deduction claimed on your corporate tax return. It follows the CRA's class rules, which may differ from the accounting depreciation schedule.

The two numbers often don't match exactly — that's normal and expected.

FAQ

Do I calculate CCA myself?

No. Your Mesa CPA advisor calculates your CCA claim at year-end as part of preparing your corporate tax return. Your job is to make sure all asset purchases are recorded correctly in QBO so the right information is available.

What happens when I sell an asset that still has UCC?

When you dispose of an asset, the proceeds are subtracted from the UCC of the class. If this creates a negative balance in the class, you have a recaptured CCA — which is added back to your income. If the class ends at a positive balance when the last asset in the class is sold, the remaining UCC is a terminal loss — deductible against income.

Does CCA apply to land?

No. Land cannot be depreciated because it doesn't wear out. Only the building on the land (Class 1) is eligible for CCA.

What's the Immediate Expensing deduction?

A temporary measure (currently available to CCPCs) that allows full expensing of eligible depreciable property in the year of purchase, up to $1.5M per year. Effectively replaces CCA for qualifying assets in the year they're bought. Your Mesa CPA advisor will determine whether it applies to your purchases.