Depreciation and Capital Gains Allowance

Depreciation involves spreading the cost of an asset that lasts for years (equipment, vehicle, building) over its entire useful life, instead of expensed at once. Capital cost allowance (CCA) is its tax equivalent: the portion of this cost that you can deduct each year for tax purposes.

Brief

Depreciation = spreading the cost of a durable asset over several years across your accounts
CCA (Capital Cost Allowance) = the tax version, which is subtracted from your taxable income (the amount on which tax is calculated)
Each item has a category with a fixed annual percentage (office furniture: category 8 to 20%; computers: category 50 to 55%)
Reduce your tax without having to withdraw more money from your account

Why does this matter?

You buy a $40,000 truck for your business. The tax authorities don't allow you to deduct the full $40,000 all at once: you deduct a portion each year, as if the truck were gradually "losing value." For most vehicles (category 10), this is 30% per year. The result: you pay less tax without spending a single extra euro. Properly allocated, the Capital Gains Allowance (CGA) puts your deductions where they save you the most. Bankeo connects you with a verified accountant/CPA free of charge to categorize each purchase correctly, and we'll be there to support you every step of the way.

Frequently asked questions

What exactly is DPA?

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 do not deduct it all at once: the tax authorities spread the deduction over several years.

What is the difference between depreciation and capital cost allowance (CCA)?

Depreciation is the figure in your financial statements (the report summarizing the company's accounts). Capital cost allowance (CCA) is the tax figure, calculated according to fixed percentage categories imposed by the tax authorities. Both have 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 will connect you with a verified accountant/CPA free of charge to apply the correct rate, and we'll be there to support you every step of the way.