What is CCA recapture? Give an example

A recapture of capital cost allowance (CCA) can occur when the proceeds from the sale of depreciable rental property are more than the total of following these both:

• The undepreciated capital cost (UCC) of the class at the start of the year.
• The capital cost of any additions during the year.

Then the recaptured CCA is added to the business income.

Example: In 2014, Peter bought a piece of machinery for $10,000. In 2021 the UCC for this piece of machinery was $6,000 (10,000 – 4,000). In 2021, he sold the machinery for $8,000. In this case the recapture is $2,000 (6,000-8,000) which must be added to business income.