Capital Cost Allowance (CCA)
The CRA's version of depreciation — an annual tax deduction for the declining value of business assets you own.
Last reviewed July 23, 2026
Reviewed for accuracy and clarity by Sandeep Singh before publication. Learn about our editorial process.
What it means
Capital Cost Allowance is the deduction the CRA allows for the declining value of a business asset over time, calculated using prescribed rates by asset class (for example, 30% for most vehicles). Unlike a lease payment, CCA is only available to owners, and it's spread out over multiple years rather than deducted all at once.
Why it matters
For expensive assets like passenger vehicles, the CRA caps how much cost can actually be depreciated (a $39,000 ceiling for cars in 2026, regardless of the purchase price) — which is exactly why leasing sometimes produces a larger annual deduction than buying for costlier vehicles.
Common misunderstandings
- CCA is optional each year, not automatic — a business can choose to claim less than the maximum, which sometimes makes sense for tax planning.
- Selling an asset for more than its remaining undepreciated value can trigger "recapture," adding past CCA back into taxable income.
Where you'll see it
On business tax returns (Form T2125 for the self-employed), and in any comparison between buying and leasing a business vehicle or equipment.
Related terms
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