Undepreciated capital cost (UCC)

Sellers and buyers of assets meet UCC because the CRA’s folio says its calculation also determines recapture and terminal loss when depreciable property is sold. The folio describes UCC as the capital cost of all property in the class, whether or not still owned, less the CCA previously claimed and the net proceeds, or capital cost if less, from dispositions.

How the balance moves

The CRA’s Form T2125 guidance computes UCC after additions and dispositions as the opening balance plus the cost of additions, minus the proceeds of dispositions. Capital cost allowance claimed reduces the balance for later years. The statutory formula in subsection 13(21) has further terms, so it is not just that sum.

Where the balance ends up

• If the balance is negative, subsection 13(1) includes the excess in income, called recapture, covered in CCA recapture
• If the balance is positive and no property is left in the class at the end of the fiscal period, the CRA says there may be a terminal loss
• Ask the seller for the class-by-class schedule, and see claiming a terminal loss