Recapture of capital cost allowance and terminal loss

In the case of depreciable property, when the proceeds of disposition exceed the undepreciated capital cost, there is usually a recapture of capital cost allowance. The recapture must be included in your income on the tax return.

When the proceeds of disposition are less than the undepreciated capital cost, the result is a terminal loss, which can be deducted on your tax return.

NOTE: The rules for recapture and terminal loss do not apply to passenger vehicles in class 10.1 (cost more than $30.000).

For more information, please consult the interpretation bulletin IT-478 - "Capital Cost Allowance - Recapture and Terminal Loss".

https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/sole-proprietorships-partnerships/report-business-income-expenses/claiming-capital-cost-allowance.html

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Webpage: KPA320-20211004204253DE.htm

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