Capital Cost Allowance (CCA) Guide

Entering this Amount (from Forms):

Entering capital cost allowance (CCA)

Review the CRA rules and requirements for claiming CCA.

CCA is calculated on the self-employment form that applies.

CCA is calculated on the self-employment form that applies.

  • Business, Commission, and Professional Income - T2125, Statement of Business or Professional Activities
  • Farming Income
    • T2042 - Statement of Farming Activities (for those who do not participate in AgriStability or AgriInvest); or
    • T1175 - Calculation of Capital Cost Allowance (CCA) and Business-use-of-home Expenses (including the harmonized programs)
  • Fishing income - T2121, Statement of Fishing Activities

For rental income, see CCA on rental operations instead.

Note:

TurboTax uses the declining balance method to calculate CCA.

TurboTax reduces the CCA for properties acquired in the year - 50% rule.

The CRA chart includes two columns (columns 5 and 6) which you won't see in TurboTax. We leave these out as TurboTax automatically does these calculations for you.

  1. Enter information about the classes (other than class 10.1) you claimed last year. If you transferred last year's return, this information is filled in automatically.
    1. in the Calculation of capital cost allowance claim chart, enter the Class # you used last year, and the UCC at the start of your fiscal year.

      This is Part 11 on form T2125, and Area A on form T1175, form T2121, and form T2042.

    2. In the Class # column, enter the same class that you used last year.
    3. For each class, enter the UCC at the start of your fiscal period in UCC Start of Year.

      You have to reduce your UCC at the start of the current fiscal period by any investment tax credit deducted, refunded, or both, in 2022.

  2. Enter eligible new additions in the year if you want to claim CCA on them.

    The property must be available for use in order to be eligible.

    Do not enter the cost of land here. Instead, enter information about land in the chart Land additions and dispositions in the year (line 9923).

    1. Complete the additions in the year chart that matches the type of property according to CRA guidelines.
    2. If part of the property (other than a motor vehicle) is for your own use, enter your personal portion in the Personal column. The personal portion for vehicles is calculated using the mileage you enter.

      CCA on motor vehicles will not be claimed until you complete the mileage. If you have more than one vehicle with CCA, see Adjusting allowable portion.

    3. After completing the additions in the year chart, return to the Calculation of Capital Cost Allowance claim chart. If you already had property in the same class, the calculation of CCA for that class now includes your newly acquired property. If you did not already have property in the same class, enter the class number in the first column, then press the Tab key on your keyboard. The information about your new property (or properties) appears.
  3. If you sold or otherwise disposed of property on which you had claimed CCA:
    1. Complete the dispositions in the year chart that matches the type of property according to CRA guidelines.
    2. In column 3, enter either the proceeds of disposition (minus any related expenses) or the capital cost, whichever is less.
    3. If part of the property (other than a motor vehicle) is for your own use, enter your personal portion in the Personal column. The personal portion for vehicles is calculated using the mileage you enter.
    4. If you had a terminal loss, see claiming a terminal loss.

    Any recapture of CCA is automatically added to income on page 1.

TurboTax calculates the maximum allowable CCA for 2023 and claims it on line 9936.

The amount in UCC at the end of year is the remaining undepreciated capital cost allowance to be carried forward. If you have an amount here but you no longer have any property in the class, you have a terminal loss. See claiming a terminal loss for what to do in this case.

The Details of land additions and dispositions in the year does not transfer to the Calculation of CCA chart. Land is not considered a depreciable property.

If you disposed of a property and you also have a capital gain for the property (that you do not defer or postpone), enter it in Schedule 3.

Entering this Amount (from Interview):

Claiming capital cost allowance (interview)

For rental properties, see instead Entering rental income and expenses.

Claim Capital Cost Allowance (depreciation) for equipment or buildings used for your business in the INCOME & EXPENSES section of the interview, under self-employment.

Claim Capital Cost Allowance on class 10 or 10.1 vehicles in the Motor Vehicle Expenses section of the interview instead of the CCA section. Then TurboTax can calculate your business portion for you.

  1. Click INCOME & EXPENSES in the left-side menu.
  2. Click Continue until you reach the Business Income screen.
  3. Click the form for your type of business.
  4. For details on entering CCA, see enter CCA - forms view.

TurboTax calculates your CCA claim and enters it on the appropriate business form.

Frequently Asked Questions

What do I do if I have a terminal loss?

Entering a CCA terminal loss

If you had a terminal loss, follow these steps.

Note:

The rules for recapture and terminal loss do not apply to passenger vehicles in Class 10.1.

Enter your CCA as shown below. An example is provided for you.
  1. At the beginning of the year, Pat had an undeducted capital cost (UCC) of $2,400 for Class 3. At the end of the T2125 Capital Cost Allowance (CCA) screens, Pat clicks Enter UCC Balances From Prior Year.
  2. Pat selects the class number (3: 5%), and the amount of UCC at the beginning of the year ($2,400).
  3. He selects any other class numbers, and their amounts of UCC at the beginning of the year.
  4. Pat clicks Add a New CCA Class to select any other class numbers and their amounts of UCC at the beginning of the year, or he can click Done with CCA.
  5. At the end of the T2125 Capital Cost Allowance (CCA) screens, he looks in the UCC Balances section.
  6. He sold all of his class 3 property for $900.00 in 2023, so he clicks Enter Additions/Dispositions.
  7. He selects the class (3), adds a description of the property, and in the Total Proceeds field, enters $900.00, and clicks Done with CCA.
  8. He has no class 3 property at the end of the year, so he finds the line for the class he disposed of.
  9. On the final T2125 Capital Cost Allowance (CCA) screen, the CCA For Year field shows a calculated amount for class 3 of $75.00. Pat replaces that with $1500.00 (his UCC of 2,400 minus proceeds of 900).
The terminal loss is deducted from income.
How do I claim less than the maximum allowable CCA?

Claiming less than the maximum CCA

TurboTax automatically claims the highest allowable CCA for the year.

 

If you want to claim less, you can enter a different amount at the end of the CCA section of the interview.

 

What if the 50% rule doesn't apply to my new addition?

What if the 50% CCA rule doesn't apply to my new addition?

In the year you acquire a depreciable property, you can usually claim CCA on only one-half of your net additions to a class. This is known as the 50% rule. TurboTax follows this rule for new additions.

What properties are not subject to the 50% rule?

What properties are not subject to the 50% rule?

Some properties in classes 12, 13, 14, 15, 23, 24, 27, 29, and 34, as well as some properties obtained in a non-arm's length transaction are not subject to this 50% rule. For details, see the CRA Interpretation Bulletin IT-285, Capital Cost Allowance - General Comments.

You can find most CRA forms and publications on the CRA's Forms and Publications web page.

What if a property is not subject to the 50% rule?

If you want to claim more, you can enter a different amount at the end of the CCA section of the interview.

To calculate the CCA manually, get the self-employment form that applies to you from the CRA. Manually calculate the CCA for the entire class on the CRA form.

Repeat the process for each class in which you have property that is exempt from the 50% rule.

You can find most CRA forms and publications on the CRA's Forms and Publications web page.

What if my CCA is not calculated on a declining balance?

What if my CCA is not calculated on a declining balance?

TurboTax uses the declining balance method of calculating CCA because the CRA requires most classes to be calculated this way. Capital cost allowance on a few properties, such as leasehold interests (class 13), and patents and franchises (class 14) may be calculated on a straight line basis.

If your CCA should be calculated on a straight line basis, manually calculate the CCA, and then change the amount at the end of the CCA section of the interview.

To calculate the CCA manually, get the self-employment form that applies to you from the CRA. Manually calculate the CCA for the entire class on the CRA form.

Repeat the process for each class in which you have property that is calculated on a straight line basis.

You can find most CRA forms and publications on the CRA's Forms and Publications web page.

Note: Overriding CCA will not make you ineligible to use NETFILE.
What if I have a recapture of CCA?

How do I claim a CCA recapture?

If you have a recapture of CCA, TurboTax automatically adds the recaptured CCA to your self-employment income (or rental income for form T776).

If this happens, you will see a negative balance in the column CCA for Year of chart Calculation of capital cost allowance claim.

For example if the total Undepreciated capital cost (UCC) of class 8 is $1000 and you sell one of the assets in this class for $1200, this shows as a negative CCA of $200. The recapture of $200 is added to your income on page 1. Example

Note:

The rules for recapture and terminal loss do not apply to passenger vehicles in Class 10.1.