Capital Cost Allowance - CCA

AAA

DEFINITION of 'Capital Cost Allowance - CCA'

A yearly deduction or depreciation that can be claimed for income tax purposes on the cost of certain assets. The term capital cost allowance relates (CCA) mainly to taxation in Canada. CCA can be claimed on the assets of a business that are expected to last for several years, such as buildings, plant and equipment, or machinery, as well as on additions and improvements to such assets. CCA is generally calculated based on the declining balance method.

INVESTOPEDIA EXPLAINS 'Capital Cost Allowance - CCA'

The Canada Revenue Agency sets down the rates at which CCA can be claimed for various classes of assets. The CCA rate for assets that are subject to rapid obsolescence such as computers, software and motor vehicles is much higher than the CCA rate for longer-life assets like buildings. Note that a business does not have to claim the maximum allowable amount of CCA in a given year, but can claim any amount from zero to the maximum.

RELATED TERMS
  1. Depreciation

    1. A method of allocating the cost of a tangible asset over its ...
  2. Canada Revenue Agency - CRA

    A federal agency that collects taxes and administers tax laws ...
  3. Canadian Income Trust

    A type of corporate structure as designated by the Canada Revenue ...
  4. Convention Statement

    A document filed by an insurance or reinsurance company that ...
  5. Capital Expenditure (CAPEX)

    Funds used by a company to acquire or upgrade physical assets ...
  6. Enterprise Value (EV)

    A measure of a company's value, often used as an alternative ...
Related Articles
  1. Home & Auto

    How To Assess A Real Estate Investment Trust (REIT)

    Find out why funds from operations is a superior measure of REIT performance.
  2. Fundamental Analysis

    Taking Stock Of Discounted Cash Flow

    Learn how and why investors are using cash flow-based analysis to make judgments about company performance.
  3. Investing

    What's a Run Rate?

    Run rate is a term used to denote annualized earnings extrapolated from a shorter time frame. Management uses the run rate to estimate future revenues.
  4. Professionals

    Financial Accounting

    Financial accounting is the process of gathering, recording, summarizing and reporting financial data relating to a business. The ultimate goal is to accurately report the financial picture and ...
  5. Investing

    What are Direct Costs?

    Direct costs for finished goods refer to the items and services directly used in production. Other costs such as rent and insurance for the production site are indirect costs. These costs may ...
  6. Investing

    What is Contingent Liability?

    A contingent liability is an amount that might have to be paid in the future, but there are still unresolved matters that make it only a possibility. Lawsuits and the threat of lawsuits are the ...
  7. Investing

    What's Accrued Interest?

    Accrued interest has two meanings. In accounting, it is interest that has been earned, but the time for payment has not yet occurred.
  8. Investing

    What is Absorption Costing?

    Absorption costing is an accounting method primarily used in manufacturing. In absorption costing, the cost of a manufactured product includes the direct costs plus an apportioned share of the ...
  9. Economics

    What Must The UK Do To Keep North Sea Oil Afloat?

    The UK government may need to take drastic action to ensure the viability of UK North Sea offshore oil production amid high costs and shrinking margins.
  10. Budgeting

    Quickbooks vs. Quicken

    QuickBooks and Quicken are two of the most widely used financial management tools in the world. Determine which one is right for you.

You May Also Like

Hot Definitions
  1. Fiat Money

    Currency that a government has declared to be legal tender, but is not backed by a physical commodity. The value of fiat ...
  2. Interest Rate Risk

    The risk that an investment's value will change due to a change in the absolute level of interest rates, in the spread between ...
  3. Income Effect

    In the context of economic theory, the income effect is the change in an individual's or economy's income and how that change ...
  4. Price-To-Sales Ratio - PSR

    A valuation ratio that compares a company’s stock price to its revenues. The price-to-sales ratio is an indicator of the ...
  5. Hurdle Rate

    The minimum rate of return on a project or investment required by a manager or investor. In order to compensate for risk, ...
  6. Market Value

    The price an asset would fetch in the marketplace. Market value is also commonly used to refer to the market capitalization ...
Trading Center