Simon Zhong

An example about how to calculate capital cost allowance (CCA)

The money you spend on purchasing capital assets for your business is capital expenditure. Unlike the day-to-day expenditures such as telephone bills, office stationery,  rent, or car lease, a capital expenditure cannot be fully deducted immediately as a business expense. It can only be deducted over time in a form of depreciation. In stead of using the term “depreciation”, the tax department calls it Capital Cost Allowance or CCA. Capital cost allowance was calculated by depreciating the cost of the assets at certain rate. To prevent anyone from taking advantage by depreciating assets too quickly to defer taxes, there are strict rules regarding the depreciation rate and how an asset should be depreciated. Here is an example showing you how to calculate CCA.

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