Depreciation Calculator (CCA)

Capital Cost Allowance (CCA) in Canada

Capital Cost Allowance is the Canadian tax system’s method for depreciating business assets. Instead of deducting the full cost of an asset in the year of purchase, CRA requires you to claim a percentage each year based on the asset’s CCA class. The system uses the declining balance method, meaning the deduction is calculated on the remaining undepreciated capital cost (UCC) rather than the original cost. The half-year rule applies in the first year: CCA is calculated on only 50% of the net addition to the class, regardless of when during the year the asset was acquired.

The Accelerated Investment Incentive Property (AIIP) rule, introduced in the 2018 Fall Economic Statement, enhanced first-year CCA by allowing a 1.5x deduction for eligible assets. This incentive is being phased down—assets acquired in 2024 receive a 75% enhanced allowance, and the program phases out entirely after 2027. For zero-emission vehicles (Class 54), a full first-year write-off was available until 2024, now being phased down gradually. These incentives significantly affect the timing of asset purchases for tax planning purposes.

Common CCA Classes and Rates

CCA is optional—you can claim less than the maximum in any year, which is useful if your income is low and the deduction would be wasted. Unused CCA carries forward in the UCC balance indefinitely. When you sell a depreciable asset, the proceeds reduce the UCC of the class. If the UCC goes negative, the resulting amount is recaptured as income. Proper CCA planning, especially around year-end asset purchases, can meaningfully reduce your business tax burden.