What is CCA (Capital Cost Allowance)?

As a business owner, it is important to understand the various tax deductions that are available to you. One such deduction is Capital Cost Allowance (CCA), which allows for the depreciation of certain business assets. These assets may include furniture and fixtures, printers, computers, software, machinery, vehicles, buildings, and more. In order to qualify for CCA, the assets must be used by the business to earn income.

The Canada Revenue Agency (CRA) uses different classes to categorize capital assets and determines the percentage of CCA that can be claimed each year. It is important to maintain detailed records of your assets and the amount of CCA claimed for each year, as this will help you calculate the net book value of each asset, which declines each year until it reaches zero. Detailed records of assets will also be helpful in calculating any gains or losses on the sale or trade-in of the asset.

While claiming CCA can be a valuable tax deduction, it is important to accurately record and report all relevant information to the CRA. By understanding and properly utilizing CCA, business owners can effectively manage their finances and make informed decisions about their assets.