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GLOSSARY

Canadian Financial, Real Estate and Mortgage Glossary

How often this word is used
 
^
50% - Moderately

Capital Cost Allowance


Acronyms &
abbreviations:
CCA
Relevant locations:Canada
Filed Under: financial-banking, taxation
Tags: taxes
 
Broadly associated with: [Government of Canada]
Narrowly associated with: [Canada Revenue Agency]

Definition of capital cost allowance (CCA)

capital cost allowance (CCA)
1. A method of amortizing and expensing depreciable items as defined by the Canadian Income Tax Act (ITA). It is an annual amount, sometimes stated as a percentage, which may be deducted from the value of certain capital assets and treated as an expense when calculating a company's or an individual's income for a taxation year.

Related Terms and Acronyms:

  • capital assets   Items that you own for investment or personal purposes, such as stocks, bonds or stamp collections. When you sell a capital asset, depending on the price you earn a capital gain or a capital loss. Gains are taxed at a special rate, and losses can be used in many cases to reduce the amount that is taxed. See also "Capital Gain" or "Capital Loss."
  • capital investments   Money used to purchase permanent fixed assets for a business, such as machinery, land or buildings as opposed to day-to-day operating expenses.
  • depreciation   The gradual loss of value of a building or other property because of age or natural wear.
  • expense   Costs incurred through a business's operations.
  • income tax   The main source of revenue for the federal government and many Provinces. The tax is based on your earned and unearned income. The amount or percentage taxed is based on the amount of income, using the governments graduated tax scale.

Broad and Narrow Associations

[Government of Canada]
  • Registered Retirement Savings Plan (RRSP)Canada, Very Important   A savings plan introduced by the federal government to encourage Canadians to save money for retirement. The investment and the interest earned on it is sheltered: it will not be taxed as long as it is left in the plan.
      ➥  Tax deferred investment contribution used to reduce income tax.
  • Canada Mortgage Bonds (CMB) — Est. 2001, Canada, Very Important   A fully guaranteed fixed interest rate income investment backed by CMHC (a crown corporation of the Government of Canada).
      ➥  Issued by the Canada Housing Trust (CHT).
  • Canada Mortgage and Housing Corporation (CMHC)Company Est.1946, Canada-wide, Very Important   The Canada Mortgage and Housing Corporation: this is a Federally run institution that provides banks and lenders with mortgage insurance. Not to be confused with life or property insurance. In the event of default or foreclosure CMHC assumes responsibility of the property and reimburses the bank/lender the entire mortgage amount. This insurance is required generally when you have less than 25% equity or down payment. This insurance is paid by the property owner in advance but usually added to the mortgage amount. See also "G.E. Capital."
      ➥  Insures Canadian mortgage lenders.
  • Registered Education Savings Plan (RESP)Canada, Very Important   An investment vehicle used for a child's post-secondary education.
      ➥  RESPs are offered by most financial institutions in Canada.
  • Home Buyers' Plan (HBP)Canada, Very Important   A way for a homebuyer to use part of his or her RRSP as a down payment on a mortgage.
      ➥  Government assistance for first-time homebuyers.
[Canada Revenue Agency]
  • Registered Retirement Savings Plan (RRSP)Canada, Very Important   A savings plan introduced by the federal government to encourage Canadians to save money for retirement. The investment and the interest earned on it is sheltered: it will not be taxed as long as it is left in the plan.
      ➥  Tax deferred investment contribution used to reduce income tax.
  • Home Buyers' Plan (HBP)Canada, Very Important   A way for a homebuyer to use part of his or her RRSP as a down payment on a mortgage.
      ➥  Government assistance for first-time homebuyers.
  • registered retirement income fund (RRIF) — Canada, Important
  • Notice of Assessment (NOA)Canada, Important   A form the federal government issues when personal taxes are complete. A notice of assessment shows a breakdown of the given years income along with the balance owing or refund.
      ➥  Canada Revenue Agency's T451 tax form.
  • Canada Revenue Agency (CRA) — Company, Canada, Important

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