T2 Schedule 8: How to Calculate Capital Cost Allowance (CCA)

Did your corporation buy a pickup truck or furnish its new offices this year? The money left the account all at once, but the tax system doesn't recognize the expense in one go. The cost is deducted over several years, and that calculation is done on T2 Schedule 8.

This schedule calculates capital cost allowance (CCA), the amount your corporation can subtract from its income each year for those purchases. It is filled in from the documents to prepare for your T2 return, including your invoices for equipment bought and sold. A purchase late in the tax year or a single sale is enough to change the result, and legislation passed in March 2026 brought back an enhanced deduction for most property acquired after 2024.

What is Schedule 8 of the T2 return?

Schedule 8 of the T2 return is the form where a corporation calculates its capital cost allowance (CCA), the portion of the cost of its long-lasting assets that it deducts from its income each year. The Canada Revenue Agency (CRA) publishes this CCA schedule as form T2SCH8. When a corporation sells an asset, it also uses the schedule to work out what the sale adds to its income, the recapture of CCA, or what it takes away, the terminal loss.

Your financial statements already include depreciation, but that figure isn't used to calculate tax. CCA replaces it, at a rate set by regulation for each CCA class. Furniture is deducted at 20% a year and most vehicles at a CCA rate of 30%, according to the CCA classes and rates published by the CRA.

Schedule 8 uses the same classes and groups assets under them. Each line starts with a class number, so all the furniture sits on one line and the pickup trucks on another.

Which corporations have to file Schedule 8?

Every corporation that owns depreciable property attaches Schedule 8 to its T2 return, even in a year when it claims no CCA. The schedule then carries the balance forward to the next tax year. It is also needed in the year the corporation sells its last assets, to calculate the recapture of CCA or the terminal loss.

To know whether your corporation is covered, check whether it owns property eligible for CCA. Depreciable property is a long-lasting asset used to earn income, such as a computer, furniture, a vehicle or a building. Land never qualifies.

A corporation that owns no property of this kind doesn't have to attach Schedule 8. That is the case for a holding company that holds only financial investments. Schedule 8 is one of the T2 return schedules that only the corporations concerned have to file.

How do you read Schedule 8?

Schedule 8 is read line by line, one class of property at a time, from the balance at the start of the tax year to the balance at the end. The CRA describes each column in its T2 Corporation Income Tax Guide.

UCC, short for undepreciated capital cost, is the amount left to deduct in a class of property. It is the balance Schedule 8 tracks from one year to the next. It goes up with purchases, then goes down with sales and with the CCA claimed each year.

How to calculate CCA for a class

To calculate CCA, start with the UCC of the class at the beginning of the year, add the year's purchases, subtract the proceeds of sales, apply the year-of-purchase adjustment, then multiply the result by the CCA rate of the class. Schedule 8 does this on one line per class, in six steps.

Except in classes 13 and 14, which spread the cost over a set period, the calculation then comes down to one CCA formula.

Maximum CCA = (UCC after the year's purchases and sales ± year-of-purchase adjustment) × CCA rate of the class

Because the rate applies to this balance and not to the purchase price, CCA goes down from one tax year to the next in most classes when the corporation buys nothing.

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What happens on Schedule 8 when the corporation buys an asset?

When your corporation buys an asset, its cost is added to the balance of its class, and the year's CCA is calculated on the new balance. For most assets bought in 2026, the half-year rule doesn't apply. An accelerated deduction replaces it in the year of purchase.

Accelerated CCA

Accelerated CCA increases the CCA for the year of purchase. The cost of the asset is increased by 50% for the first-year calculation, for most property acquired after 2024 and available for use before 2030.

It comes from the Accelerated Investment Incentive, in place since late 2018. The incentive applied in full to property available for use before 2024, then was meant to phase out gradually. Legislation passed in March 2026 brought it back. On Schedule 8, the property it covers has its own columns.

Before this incentive, the half-year rule counted only half the cost of an asset in the year it was bought. It still applies to property that doesn't qualify for accelerated CCA.

Take a $10,000 furniture purchase, at the 20% rate. The first-year CCA depends on the asset's situation.

For a purchase made in 2026, the cost of the asset counts one and a half times, or $15,000, and the first-year CCA reaches $3,000. An asset acquired before 2025 and available for use from 2024 to 2027 counts at its actual cost, $10,000, which gives $2,000. Under the half-year rule, only half the cost counts in the year of purchase, or $5,000, and the CCA drops to $1,000.

In all three cases, the total deducted over the life of the asset is the same. The incentive only moves part of it forward to the first year, which leaves less to deduct in the following years.

The last row covers, for example, an asset that already belonged to your corporation, or to a person who doesn’t deal at arm’s length with it, such as the shareholder who controls it. Some classes, on the other hand, go further than the table. Computer equipment acquired after April 15, 2024, and available for use before 2027 generally qualifies for immediate expensing, which means its full cost can be deducted in the first year.

Available for use and the length of the tax year

The invoice date isn't enough. The available-for-use rule determines the year your corporation can start claiming CCA, which is generally the year it starts using the asset. A machine delivered in December and installed in February counts in the next tax year, if yours ends on December 31.

The length of the tax year matters too, especially for a newly incorporated corporation. When the tax year is shorter than 365 days, CCA is generally reduced in proportion. For a first tax year of 200 days, a CCA of $3,000 comes down to $1,644.

How does CCA reduce the corporation's taxable income?

Schedule 8 reduces your corporation's taxable income by an amount equal to the CCA claimed.

The CCA calculated on Schedule 8 is carried to Schedule 1 of the T2, where it is deducted on line 403. That schedule starts from the net income in your financial statements, sent to the CRA on Schedules 100 and 125, and cancels the accounting depreciation that was already subtracted from it.

Example of a capital cost allowance calculation

Imagine you run a service corporation whose tax year ends on December 31. At the start of 2026, you have $12,000 left to deduct on the office furniture, which is in Class 8 at the 20% rate. In March, the team grows. You buy $10,000 worth of desks and chairs, set up the same week.

In 2026, you can deduct up to $5,400, which is 20% of $27,000. That $27,000 combines the $22,000 balance after the purchase and the $5,000 increase, half of what you just spent. The increase counts only for the 2026 calculation and adds nothing to what you have left to deduct.

At the end of 2026, you have $16,600 left to deduct, which is $22,000 minus $5,400. If you neither buy nor sell anything in 2027, the rate applies to that balance and the CCA goes down to $3,320.

If you claim the maximum in 2026, the CCA amount entered on line 403 of Schedule 1 is $5,400, and your corporation's taxable income goes down by the same amount. Nothing requires you to claim that maximum. CCA is optional, and whatever you leave aside stays available to deduct in later years.

What happens on Schedule 8 when the corporation sells an asset?

When your corporation sells an asset, the sale price is removed from the balance of its class, and CCA continues on what is left. Schedule 8 records the sale as a disposition and its price as the proceeds of disposition. The price used can't be more than what the asset cost. If your corporation sells for more than it paid, the excess becomes a capital gain, handled elsewhere in the return.

Suppose your corporation moves to remote work. You sell all the desks and chairs from the office, originally bought for $20,000, and you had $8,000 left to deduct on that furniture. Depending on the price you get, the sale produces a recapture of CCA, which is added to your income, or a terminal loss, which is deducted from it.

At $11,000, the sale price exceeds what you had left to deduct by $3,000, and the balance of the class drops below zero. Schedule 8 brings it back to zero and enters that $3,000 in the recapture of CCA column. The amount is then added to your corporation's income, on line 107 of Schedule 1.

At $5,000, there is $3,000 left to deduct, while there is no property left in the class. That $3,000 goes in the terminal loss column and is deducted from income all at once, on line 404 of Schedule 1.

In both cases, the class gives no CCA that year and its balance restarts at zero.

So the result of a sale depends on the gap between the price you get and the undepreciated capital cost (UCC) of the class.

Some sales follow special rules, and the result on Schedule 8 is no longer a simple subtraction. That is the case for a change in use, a sale to a person who doesn't deal at arm's length with the corporation, a building sold with its land, or a rental property. The CRA sets them out in its income tax folio on capital cost allowance.

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What is the Quebec equivalent of Schedule 8?

In Quebec, the equivalent of Schedule 8 is form CO-130.A, Capital Cost Allowance, attached to the CO-17 return. Schedule 8 is the federal capital cost allowance schedule, and a corporation with an establishment in Quebec calculates its CCA twice, once for the CRA and once for Revenu Québec.

The two calculations are similar without being identical. The classes are generally the same, and Quebec also applies the incentive to property acquired after 2024. Some of its rules are its own, though. A new heavy truck used to haul freight, for example, is written off at 60% there, compared with a CCA rate of 40% at the federal level. The balance of a class can differ from one level of government to the other, and each one is tracked on its own form.

Which errors distort the CCA calculation?

The errors to avoid on Schedule 8 concern three entries, namely the opening balance, the cost of the assets and their class.

• An opening balance that doesn't match the previous year's closing balance. Every later deduction then starts from the wrong number.
• Land entered with the building. When your corporation buys a building, the price has to be split between the two, because only the building is deductible.
• GST/HST and QST left in the capital cost of an asset. If your corporation recovers them, depreciating them would mean counting them twice.
• A passenger vehicle in the wrong class. Above the cost ceiling, it goes in CCA Class 10.1, a separate class for each vehicle, and its sale follows different rules.

An up-to-date asset register helps avoid these errors. For each purchase, it keeps the acquisition date, the date the asset became available for use, the cost and the class.

What should you remember for your T2 return?

Schedule 8 is where your equipment purchases become deductions, year after year. A pickup truck or furniture paid for today will still reduce your corporation's taxable income several tax years from now.

Because each year starts from the previous year's balance, an error doesn't go away on its own. It distorts the later deductions until it is corrected.

At T2inc.ca, we prepare Schedule 8 with the rest of your return. We need your accounting records, the list of assets bought or sold during the tax year and, if this is your first year with us, the previous year's Schedule 8.

Every return is reviewed by an experienced tax accountant. You can file your T2 corporation income tax return online with our team and get a no-obligation price.

This information is provided for educational purposes and is not personalized tax advice. Every situation is different. Consult a CPA about your specific case.

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