Basic information about Capital Cost Allowance (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.
  • Generally, use the declining balance method to calculate your CCA. This means that you claim CCA on the capital cost of the property minus the CCA you claimed in previous years, if any. The remaining balance declines over the years as you claim CCA.


Last year, Nick bought a building for $60,000 to use in his business. On his tax return for last year, he claimed CCA of $1,200 on the building. This year, Nick bases his CCA claim on his 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.
    For example, 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 CCA available for future years will be reduced.
  • In the year you acquire a property, you can usually claim CCA only on one-half of your net additions to a class. We explain this half-year rule at Column 6 - Adjustment for current year additions. The available for use rules may also affect the amount of CCA you can claim.
  • 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. For more information, go to Column 5 -UCC after additions and dispositions.
  • 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 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 a partnership does not have to file a partnership information return, you will not receive aT5013 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 Calculating 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).

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