Capital Cost Allowance (CCA) is the means by which Canadian businesses may claim depreciation expense. Depreciable assets are deemed to belong to different classes which depreciate at various rates as set out by legislation. Except in limited cases, the value of all assets belonging to that class are accumulated in a pool, and the designated percentage for that class may be claimed on the balance remaining in that class at the end of the taxation year. CCA may only be claimed commencing in taxation years that the assets are available for use. Generally, only one-half of value of net additions to the class are used for the purposes of the current year's calculation for most asset classes.
Some examples of asset classes are,
| Class | Rate | Description |
|---|---|---|
| Class 1 | 4% | Buildings acquired after 1987 |
| Class 3 | 5% | Building acquired before 1987 |
| Class 8 | 20% | Assets not included in other classes |
| Class 9 | 25% | Aircraft |
| Class 10 | 30% | Cars costing less than 30 000 |
| Class 12 | 100% (no half year rule) | Small equipment and tools costing less than $500 |
| Class 13 | Original lease period plus one renewal period
(Minimum 5 years and Maximum 40 years) |
Improvements made to leased premises |
| Class 14 | Length of life of property (no half year rule) | Franchises, Concessions, Patents, and Licences |
| Class 17 | 8% | Parking lots |
| Class 43 | 30% | Machinery and equipment used for production |
| Class 44 | Patents acquired after April 26, 1993 | |
| Class 45 | 45% | Computer equipment and systems software acquired after March 22, 2004 and before March 19, 2007 |
| Class 46 | 30% | Data network equipment acquired after March 22, 2004 |
| Class 50 | 55% | Computer equipment and systems software acquired after March 18, 2007 |
| Class 52 | 100% (no half year rule) | Computer equipment and systems software acquired after January 27, 2009 and before February 2011. Only applies to new equipment used in Canada. |
In contrast to the practice followed in the United States for depreciation there is no penalty for failing to claim Capital Cost Allowance. Where a taxpayer claims less than the amount of CCA to which he is entitled the pool remains intact, and available for claims in future years. Unclaimed amounts are not subject to recapture.
Famous quotes containing the words capital, cost and/or allowance:
“In bourgeois society capital is independent and has individuality, while the living person is dependent and has no individuality.”
—Karl Marx (1818–1883)
“Oh high is the price of parenthood,
And daughters may cost you double.
You dare not forget, as you thought you could,
That youth is a plague and a trouble.”
—Phyllis McGinley (20th century)
“Sometimes, because of its immediacy, television produces a kind of electronic parable. Berlin, for instance, on the day the Wall was opened. Rostropovich was playing his cello by the Wall that no longer cast a shadow, and a million East Berliners were thronging to the West to shop with an allowance given them by West German banks! At that moment the whole world saw how materialism had lost its awesome historic power and become a shopping list.”
—John Berger (b. 1926)