Glossary · Assets and depreciation
Capital cost allowance (CCA)
Capital cost allowance is the Canadian tax deduction for the cost of depreciable property such as equipment, vehicles, computers and buildings. Assets are grouped into CRA classes, each with a set rate, and the deduction is usually a percentage of the class's undepreciated capital cost (UCC) on a declining balance each year.
Glossary / Capital cost allowance
How it works
CCA replaces depreciation on a Canadian tax return. Your financial statements can still show straight-line depreciation; the tax return uses CCA. Each asset goes into a class: Class 8 (most furniture and equipment) is 20%, Class 10 (general-purpose vehicles) is 30%, and Class 50 (computer hardware) is 55%.
The pool for each class is its undepreciated capital cost. Additions increase it, disposals reduce it, and each year's CCA is the class rate times the UCC. You may claim less than the maximum, or nothing, in a year; the unclaimed amount stays in the pool for later years. First-year rules, such as the half-year rule and the accelerated investment incentive, change the first claim, so check the CRA's current rules for the year you buy.
Worked example: Class 8 equipment, a later year
A print shop's Class 8 pool has a UCC of $8,000 at the start of the year, and nothing was bought or sold. The maximum CCA is 20% × $8,000 = $1,600. The UCC carried into next year is $6,400, and next year's maximum is 20% × $6,400 = $1,280.
If the shop had a loss year and claimed nothing, the UCC would stay at $8,000 for next year. That flexibility is one reason CCA is planned with an accountant.
| Year | Opening UCC | CCA at 20% | Closing UCC |
|---|---|---|---|
| 1 | $8,000 | $1,600 | $6,400 |
| 2 | $6,400 | $1,280 | $5,120 |
| 3 | $5,120 | $1,024 | $4,096 |
In the US and in Canada
In Canada
Passenger vehicles over the limit go into Class 10.1, where only the first $39,000 (plus sales tax on that amount) counts for vehicles acquired in 2026, and each vehicle is its own class. Zero-emission passenger vehicles in Class 54 are limited to $61,000 plus sales tax for 2026.
In AcboBooks
AcboBooks keeps fixed assets with straight-line book depreciation. It does not calculate CCA by class; the depreciation calculator on this site does, and your accountant enters the claim on the return.
Related terms
Related on this site
Sources
Updated October 25, 2026. General information, not tax, legal or accounting advice. Rules and rates change; check with the IRS, the CRA, your state or province, or your accountant.
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