Depreciation and CCA

Depreciation involves spreading the cost of an asset that lasts for years (equipment, vehicle, building) over its entire useful life, rather than expensing the entire amount at once. The CCA (depreciation allowance) is the tax equivalent: the portion of that cost that the tax authorities allow you to deduct each year.

At a glance

Depreciation = spreading the cost of a durable asset over several years in your financial records
CCA (depreciation allowance) = the tax-related term, which is subtracted from your taxable income (the amount on which your tax is calculated)
Each asset is assigned to a category with a fixed annual depreciation rate (office furniture: Category 8 at 20%; computers: Category 50 at 55%)
Lower your taxes without having to take more money out of your account
Half-Year Rule: Normally, in the year of purchase, only half the rate is deducted, but the accelerated investment incentive currently suspends this rule for eligible property put into service in 2026 (first year increased to 1.5 times the rate)

Why it matters

You buy a $40,000 passenger car for your business. The tax authorities won’t let you deduct the entire $40,000 at once: you deduct a portion of it each fiscal year, as if the car were “losing value” little by little while it’s listed as an asset on your balance sheet. A passenger car whose cost exceeds the cap falls into category 10.1, where the cost eligible for the CCA is capped ($39,000 before taxes for a vehicle acquired in 2026) at a rate of 30% per year. The half-year rule normally reduced the first-year deduction by half, but the accelerated investment incentive currently suspends this rule for eligible property: instead, the first-year deduction is increased to 1.5 times the rate, approximately $17,550 (1.5 × 30% × $39,000), followed by 30% on the remaining balance thereafter, as explained in the Canada Revenue Agency. The result: you pay less in taxes without spending a single dollar more. If you use your personal car instead, the Mileage Allowance There may be an easier way. When properly allocated, the CCA places your deductions where they save you the most. Bankeo connects you for free with a verified accountant or CPA who categorizes each purchase correctly, and we’re here to support you every step of the way.

Frequently asked questions

What exactly is the CCA?

This is the portion of the cost of a durable good (computer, machine, vehicle) that you are entitled to deduct from your income each year. You don’t deduct the entire amount at once: the tax authorities spread the deduction over several years.

What’s the difference between amortization and CCA?

Depreciation is the figure listed in your financial statements (the report summarizing the business’s accounts). CCA is the tax figure, calculated based on fixed-percentage categories set by tax authorities. Both allocate a cost, but for different purposes.

What are the current rates?

For example, 20% per year for office furniture (category 8), 55% for computers (category 50), and 30% for most vehicles (category 10). Bankeo connects you, for free, with a vetted accountant or CPA who applies the correct rate, and we’re here to support you every step of the way.