Call us: +1 416-755-3000
[email protected]
  • Toronto
    • Pickering
    • Richmond Hill
    • Burlington
  • Oakville
  • Vaughan
  • Mississauga
  • Brampton
  • Ajax
  • Whitby
SDG AccountantSDG AccountantSDG AccountantSDG Accountant
  • Home
  • Services
    • Accounting Services in Toronto
      • Accounting & Bookkeeping
      • On-site Bookkeeping / Outsourced Bookkeeping
      • Payroll Services
      • Outsourced CFO & Controller Services
    • Canadian Tax
      • Corporate Tax Accountant Toronto
      • Personal Tax Accountant in Toronto
    • US Tax
      • Individuals U.S. Taxes
      • Expatriate Tax
      • U.S. Tax and Canadian Tax
      • Businesses
    • Business Advisory Services
    • Business Registration
    • CRA / IRS Representation
      • CRA Tax Audit Support
      • VDP – Voluntary Disclosure Program
    • Case Study
      • Foreign Tax Credit Audit
      • Form 1040-NR Refund Recovery
    • Notice to Readers
  • Our Team
  • Our Clients
    • Online Businesses and E-Commerce
    • Small Business Accountant in Toronto
    • Car Dealerships
    • Land Developers and Construction Companies
    • Law Firms
    • Doctors and Dentists
    • Residential And Commercial Real Estate Landlords
    • Real Estate Professionals
    • Retailers
    • Manufacturers And Distributors
    • Long-haul Truck Drivers
    • Not-for-Profit Organizations
    • Restaurants
    • Gas Stations
  • Resources
    • About Us
    • Testimonials
    • Blog
    • Careers
    • Canadian Tax Filing Deadlines and Due Dates
    • Filing Information
  • Contact Us
    • Request A Consultation
    • Locations

Making Your Assets Work for You — Claiming Capital Cost Allowance (CCA) on Your Tax Return

    Home Tax Making Your Assets Work for You — Claiming Capital Cost Allowance (CCA) on Your Tax Return
    NextPrevious
    CCA

    Making Your Assets Work for You — Claiming Capital Cost Allowance (CCA) on Your Tax Return

    By sdg team | Tax | Comments are Closed | 14 July, 2017 | 0

    Keeping track of your business expenses is an important part of your operations to ensure that you have a good handle on your finances and to accurately report your tax situation at the year-end. Alongside your expenses, your assets can be a tool you can take advantage of, depending on your goals. Following is a brief introduction to CCA.

     

    What in the World is CCA and Why Should I Care?

    CCA stands for Capital Cost Allowance and is a calculation for tax purposes for the depreciation on the assets in your business. But what does that mean in non-accounting jargon? Essentially, your equipment, property and other assets lose value over time and as you use them during the course of your regular business. The general calculation creates a way to account for that loss of value and use it to reduce your current year’s tax obligation. Not every item has the same CCA rates, so different items will provide different tax benefits, but this allows you to use your assets not only for your regular business but to also reduce your amount of tax owing.

     

    Sounds Good. What’s the Catch?

    As useful as CCA is to reduce your tax owing, this is not without regulations and exceptions. The first thing to keep in mind is that based on the calculation for CCA the amount you can claim each year is going to go down as you continue to claim it. The calculated amount each year is based off the original price of the asset, the assigned percentage for the class of asset (a link to the CRA regarding CCA classes is provided below), and how much of the asset is currently unclaimed (this portion is known as the undepreciated capital cost or UCC).

    Another aspect to keep in mind is that, unlike some other tax credits, CCA cannot be used to create a loss. No matter how much equipment you have in your business you can only use CCA to bring your net income to $0. You are not required to claim CCA at all, in fact, this process is completely optional, and in years where your CCA exceeds your income, you can choose to claim only a portion rather than reduce your UCC with reaping the benefit of the associated CCA tax credits.

    It is important to keep track of the CCA claimed on each asset, not only for future tax years but also for the event you trigger something called a CCA recapture when you sell your assets. If you sell an asset for more than the UCC this will cause a recapture for the difference between these two amounts. Normally any gains on the sale of an item are only 50% as they are considered capital gains, however, the CCA recapture is not considered a capital gain and is fully taxed at your marginal rate. This will not always be an issue and can be outweighed by the benefit of the tax savings in your previous years. Whether or not it’s beneficial will depend on your plans regarding your assets and the type of assets you have.

    In specific conditions, claiming CCA can also disqualify individuals from claiming certain tax saving opportunities. We recommend individuals considering starting a business consult with an accountant so that you can make a customized plan as to if you will want to claim CCA and on which assets you want to claim them.

     

    This site provides general information on various tax issues and other matters. The information is not intended to constitute professional advice and may not be appropriate for a specific individual or fact situation. It is written by the author solely in their personal capacity and cannot be attributed to the accounting firm with which they are affiliated. It is not intended to constitute professional advice, and neither the author nor the firm with which the author is associated shall accept any liability in respect of any reliance on the information contained herein. Readers should always consult with their professional advisors in respect of their particular situation.

    Andrew Ramires

    July 14th, 2017

    Canadian Tax, Canadian Tax Advice, Canadian Tax Return, Capital Cost Allowance, Capital Cost Allowance in Canada, CCA, Claiming Capital Cost Allowance, Introduction on CCA, Property Taxes, SDG Accountant, Tax, Tax Advisory, Tax Issues

    Related Posts

    • Canadian Tax Return

      Canadian Tax Return — Do You Know If You Need to File?

      By sdg team | 1 comment

      Are you required to file a Canadian Tax Return?   As per the Government of Canada, for the most part, people living in Canada can determine their final tax obligation by completing an income taxRead more

    • Tax Changes

      Canada’s New Tax Changes in Support of Middle Class Business Owners

      By sdg team | Comments are Closed

      Introduction In a country where the middle class dominates a majority of the population and can earn anywhere between $23,357 up to $55,498 for individuals and $38,755 to $125,009 for families of two or more, it is important to know howRead more

    • CRA Payment

      How to Make Your Payment to the CRA?

      By sdg team | 1 comment

      One of the most common questions we hear from our clients is “How Do I Make a Payment to the CRA?” Day in and day out thousands of hardworking individuals around Canada are working toRead more

    • Business in Canada

      Planning on Operating A Business in Canada

      By sdg team | 1 comment

      Operating a Business in Canada can be an exciting and rewarding prospect, but there are many issues that individuals need to keep in mind when building their enterprise. In this article, we will be breakingRead more

    • Residency

      Residency – Coming and Going from Canada: Tax Implications

      By sdg team | Comments are Closed

      Today’s discussion is on the topic of filing requirements, specifically on residency and how to determine what may affect your residency in Canada and the associated tax implications. We are a Toronto accounting firm specializingRead more

    NextPrevious

    Archives

    Categories

    • Accounting Services
    • Case Study
    • Finance
    • Tax
    • U.S Taxes
    • Foreign Tax Credit
      6 July, 2022
      Comments Off on Foreign Tax Credit Audit

      Foreign Tax Credit Audit

    • Form 1040-NR
      27 June, 2022
      Comments Off on US Form 1040-NR Refund Recovery for Canadian Citizens

      US Form 1040-NR Refund Recovery for Canadian Citizens

    • 23 June, 2022
      Comments Off on IRS Form 5471 Filing Instructions for Green Card Holders and US Citizens

      IRS Form 5471 Filing Instructions for Green Card Holders and US Citizens

    • Non-Fungible Tokens
      11 February, 2022
      Comments Off on NFTs: How are Non-Fungible Tokens Taxed in Canada?

      NFTs: How are Non-Fungible Tokens Taxed in Canada?

    • Provincial Sales Tax
      28 July, 2021
      Comments Off on Provincial Sales Tax (PST) for Business and Self-Employed Individuals 101

      Provincial Sales Tax (PST) for Business and Self-Employed Individuals 101

    • GST/HST
      22 July, 2021
      Comments Off on GST/HST for Business and Self-employed Individuals 101

      GST/HST for Business and Self-employed Individuals 101

    • Cryptocurrency
      18 June, 2021
      Comments Off on How to Calculate Capital Gains on Cryptocurrency?

      How to Calculate Capital Gains on Cryptocurrency?

    • Home Office expenses
      2 February, 2021
      Comments Off on Simplified Method for Home Office Expenses Claimed During Covid-19 (Flat-Rate Method)

      Simplified Method for Home Office Expenses Claimed During Covid-19 (Flat-Rate Method)

    • 30 November, 2020
      Comments Off on Digital-Virtual Bookkeeping Services and Remote Cloud Accountants

      Digital-Virtual Bookkeeping Services and Remote Cloud Accountants

    • Personal Real Estate Corporations
      17 October, 2020
      Comments Off on Information on Personal Real Estate Corporations (“PRECs”) in Ontario

      Information on Personal Real Estate Corporations (“PRECs”) in Ontario

    Recent Comments

    • Foreign Tax Credit Audit | SDG Accountant on U.S. Tax and Canadian Tax
    • IRS Form 5471 Filing Instructions for Green Card Holders and US Citizens – SDG Accountant on Expatriate Tax
    • Digital-Virtual Bookkeeping Services and Remote Cloud Accountants – SDG Accountant on Accounting & Bookkeeping
    • How to Calculate Capital Gains on Cryptocurrency? – SDG Accountant on Services
    • Simplified Method for Home Office expenses claimed during Covid-19 (Flat-Rate Method) – SDG Accountant on Contact Us

    About Us

    SDG Accountant
    SDG Accountant began in the spring of 2014 as an accounting firm dedicated to servicing clients with tax filing in the Greater Toronto Area. As clients appreciated working with our firm, more referrals were happening and our firm continuously grew in size. Through our customer-focused service, we rely on our client’s satisfaction into attaining more repeat business and referrals.
    Check out SDG Chartered Professional Accountant on Yelp

    Quick Links

    • Home
    • Accounting Services in Toronto
    • Canadian Tax Services
      • Toronto Accountant
    • Our Clients
    • Contact Us
    • Testimonials

    Contact Us

    Office Locations
    2 Bloor West Suite 1900, Toronto, ON M4W 3E2, Canada

    Phone Number

    Canada Office: + 1 (416) 755-3000
    USA Office: +1 (727) 367-1040

    Fax Number

    Office: + 1 647 - 946 - 4172

    Email Adress
    [email protected]

    Copyright 2020 SDG Accountant LTD. | All Rights Reserved
    • Home
    • Services
      • Accounting Services in Toronto
        • Accounting & Bookkeeping
        • On-site Bookkeeping / Outsourced Bookkeeping
        • Payroll Services
        • Outsourced CFO & Controller Services
      • Canadian Tax
        • Corporate Tax Accountant Toronto
        • Personal Tax Accountant in Toronto
      • US Tax
        • Individuals U.S. Taxes
        • Expatriate Tax
        • U.S. Tax and Canadian Tax
        • Businesses
      • Business Advisory Services
      • Business Registration
      • CRA / IRS Representation
        • CRA Tax Audit Support
        • VDP – Voluntary Disclosure Program
      • Case Study
        • Foreign Tax Credit Audit
        • Form 1040-NR Refund Recovery
      • Notice to Readers
    • Our Team
    • Our Clients
      • Online Businesses and E-Commerce
      • Small Business Accountant in Toronto
      • Car Dealerships
      • Land Developers and Construction Companies
      • Law Firms
      • Doctors and Dentists
      • Residential And Commercial Real Estate Landlords
      • Real Estate Professionals
      • Retailers
      • Manufacturers And Distributors
      • Long-haul Truck Drivers
      • Not-for-Profit Organizations
      • Restaurants
      • Gas Stations
    • Resources
      • About Us
      • Testimonials
      • Blog
      • Careers
      • Canadian Tax Filing Deadlines and Due Dates
      • Filing Information
    • Contact Us
      • Request A Consultation
      • Locations
    SDG Accountant