Undepreciated capital cost is the remaining tax value of an asset class after capital cost allowance claimed to date, the balance on which future CCA is calculated.
Within each CCA class, the undepreciated capital cost is the running balance: additions increase it, CCA claimed reduces it, and disposals reduce it by the lesser of cost or proceeds. Each year's CCA is calculated as the class rate applied to the UCC, so UCC is the number that carries the deduction forward from year to year.
UCC also drives the tax on disposals. If selling an asset pushes a class balance below zero, the negative amount is recapture, added to income. If a class is emptied of assets with a positive UCC remaining, that balance is a terminal loss. Tracking UCC by class is essential for accurate CCA and disposal treatment.
A class has a UCC of $9,000. You claim 20% CCA ($1,800), leaving $7,200. Next year CCA is 20% of $7,200, and so on down the declining balance until the asset is sold or the class is emptied.
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