A terminal loss is a deduction available when a CCA class is emptied of all assets but still has an undepreciated balance, meaning the assets depreciated faster than CCA allowed.
The mirror image of recapture, a terminal loss arises when you dispose of the last asset in a CCA class for less than its remaining undepreciated capital cost. Because you claimed less CCA than the asset actually lost in value, the leftover balance is deductible in full as a terminal loss against your income.
A terminal loss can only be claimed once the class has no assets left, so a single asset in its own class produces the cleanest result. It is a valuable deduction that is easy to miss if UCC is not tracked accurately by class.
A class holds one asset with $6,000 of UCC. You sell it for $4,000, emptying the class. The remaining $2,000 is a terminal loss, deductible in full against your income that year.
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