Capital cost allowance is the tax deduction that lets you write off the cost of business assets over several years instead of all at once, at rates set by asset class.
You cannot deduct the full cost of durable assets, vehicles, equipment, computers, buildings, in the year you buy them. Instead you claim CCA, a percentage of the asset's remaining value each year, at a rate fixed by its class. Class 8 (general equipment) is 20%, Class 10 (vehicles) is 30%, Class 50 (computers) is 55%.
CCA is calculated on a declining balance and is optional: you can claim less than the maximum, or none, in a low-income year to preserve the deduction for a higher-income year. The half-year rule generally limits the first-year claim, though recent immediate-expensing incentives have changed this for many assets.
You buy $10,000 of office furniture (Class 8, 20%). With the half-year rule you claim CCA on $5,000 in year one, so $1,000. In year two you claim 20% of the remaining $9,000 balance, and so on down the declining balance.
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