Schedule 8. Capital Cost Allowance
Schedule 8 (T2SCH8) tracks capital cost allowance by CCA class, applying the half-year rule, AIIP, and immediate expensing to compute the maximum deduction.
Definition
Schedule 8 (T2SCH8) computes the maximum capital cost allowance deductible for the year, class by class. Every CCPC holding depreciable property must file Schedule 8, even if CCA is not being claimed (a zero claim is still a valid election, and the undepreciated capital cost must be carried forward).
The schedule starts from opening UCC, adds additions, subtracts dispositions (at the lesser of proceeds and original cost), applies the half-year rule and accelerated-depreciation rules, and produces the CCA deduction that flows to line 403 of . See for the broader framework.
Key rules
Column structure (key columns):
- Column 3: Opening UCC
- Column 4: Cost of additions (AIIP and non-AIIP)
- Column 5: Cost of dispositions (lesser of proceeds and original cost)
- Column 6: UCC after additions and dispositions
- Column 9: Adjustment for half-year rule (removes half of net additions from the base)
- Column 12: CCA rate
- Column 13: CCA claimed
- Column 14: Closing UCC
Half-year rule (Reg 1100(2)): For non-AIIP property, CCA is claimed on only half of the net additions in the year of acquisition. Replaced by a net 1.5× deduction for AIIP property (see ).
Accelerated treatments (2026):
| Regime | Treatment | Scope |
|---|---|---|
| AIIP (phasing out) | 1.5× normal CCA in year of acquisition | Available property acquired before 2028 |
| Immediate expensing | 100% in year of acquisition, up to $1.5M per year | CCPC-only; property available before 2024 (largely expired for 2026) |
| Clean energy (Class 43.1/43.2) | 30%/50% DB plus accelerated | Specified clean-energy equipment |
Recapture and terminal loss: If closing UCC (column 14) is negative, that amount is and added to income on Sch 1 line 107. If UCC is positive but there is no property left in the class, a is deducted on Sch 1 line 404.
Example
Vantage Ltd. has a Class 50 (computer hardware, 55% DB) opening UCC of $4,000. During 2026 it buys a laptop for $3,000 (non-AIIP) and disposes of an old laptop for $500 (original cost was $2,000).
Common mistakes
Claiming full CCA on a new asset in the acquisition year without applying the half-year rule. Outside AIIP or immediate expensing, the half-year rule is mandatory.
- Using proceeds of $5,000 on a disposition when the original cost was $3,000. The disposition column is capped at original cost; the excess is a capital gain on .
- Failing to file Schedule 8 in a year with no CCA claim. The UCC must still be tracked.
- Treating a building's land portion as part of Class 1 or Class 3. Land is not depreciable; only the building enters CCA.
- Missing the short taxation year proration (CCA is prorated by days in short years under Reg 1100(3)).
- Forgetting to reduce a class's UCC by government assistance received.
Related concepts
Authority
- CRA Form T2SCH8
- Income Tax Act s.20(1)(a)
- Income Tax Regulations Part XI and Schedule II
- CRA Guide T4012
See also
Related entries
Capital Cost Allowance Overview
Capital Cost Allowance (CCA) is the tax version of depreciation: a declining-balance (or occasionally straight-line) deduction that spreads the cost of a capital asset across multiple tax years.
Half-Year Rule
In the year an asset is acquired, Regulation 1100(2) reduces the CCA base for net additions by 50% so the first-year deduction is halved.
Accelerated Investment Incentive Property (AIIP)
AIIP replaced the half-year rule with a 1.5× first-year CCA for most depreciable property, and is being phased out between 2024 and 2027.
Immediate Expensing ($1.5M)
Immediate expensing lets a CCPC write off up to $1.5M per year of eligible depreciable property in the year it becomes available for use, instead of claiming standard CCA.
Recapture of CCA
When disposals drive a class's UCC below zero, Income Tax Act s.13(1) recaptures the excess CCA into ordinary income in the year of disposition.
Terminal Loss
When the last asset in a CCA class is disposed of and a positive UCC remains, Income Tax Act s.20(16) allows the remaining balance to be deducted as a terminal loss.
This entry is for general reference. It does not constitute professional tax advice. Consult a qualified Canadian accountant for your specific situation.