*The Commerce Journal>>>Canada Taxes

How does recapture/terminal loss work in adding to Net Income?

Recapture results when you sell a depreciable asset with selling price MORE than the undepreciated capital cost (UCC) of that CCA class (e.g., automobile is classfied as class 10), and you have to report the recaptured capital cost allowance (CCA) as income if there is no more asset in that CCA class, because u previously claimed the amount as CCA in prior year(s).

Terminal loss results when the selling price is LESS than the UCC (and there is no more asset in the CCA class),and therefore u may deduct the difference as terminal loss.

Both items are reflected inside the CCA schedule, and are part of business expenses (income) in the determination of net income for your business.

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