Use form T2125, Statement of Business or Professional Activities, to calculate capital cost allowance (CCA) on your depreciable properties. Below, we present the more common classes of depreciable properties and their rates. We also list most of the classes and rates at CCA classes.
A building may belong to class 1, 3, or 6, depending on what the building is made of and the date you acquired it. You also include in these classes the parts that make up the building, such as:
Most land is not depreciable property. Therefore, when you acquire property, only include the cost that relates to the building in Area C and Area A of Form T2125. Enter on line 9923 in Area F the cost of all land additions in the year. For more information, see Area F - Details of land additions and dispositions in the year and Column 3 - Cost of additions in the year.
Class 1 includes most buildings acquired after 1987, unless they specifically belong in another class. Class 1 also includes the cost of certain additions or alterations you made to a Class 1 building or certain buildings of another class after 1987.
The CCA rate for eligible non-residential buildings acquired by a taxpayer after March 18, 2007, and used in Canada to manufacture or process goods for sale or lease includes an additional allowance of 6% for a total rate of 10%. The CCA rate for other eligible non-residential buildings includes an additional allowance of 2% for a total rate of 6%.
To be eligible for one of the additional allowances, you must elect to put the building in a separate class. To make the election, attach a letter to your return for the tax year in which you acquired the building. If you do not file an election to put it in a separate class, the 4% rate will apply.
The additional allowance applies to buildings acquired after March 18, 2007, (including a new building, if any part of it is acquired after March 18, 2007, when the building was under construction on March 19, 2007) that have not been used or acquired for use before March 19, 2007.
To be eligible for the 6% additional allowance, at least 90% of a building (measured by square footage) must be used in Canada for the designated purpose at the end of the tax year. Manufacturing and processing buildings that do not meet the 90% use test will be eligible for the additional 2% allowance if at least 90% of the building is used in Canada for non-residential purposes at the end of the tax year.
Most buildings acquired before 1988 are included in Class 3 or Class 6.
If you acquired a building before 1990 that does not fall into Class 6, you can include it in Class 3 if one of the following applies:
Include in Class 3 the cost of any additions or alterations made after 1987 to a Class 3 building that does not exceed the lesser of the following two amounts:
Any amount that exceeds the lesser amount above is included in Class 1.
Include in Class 6 with a CCA rate of 10% a building if it is made of frame, log, stucco on frame, galvanized iron, or corrugated metal (corrugated iron before 1988). In addition, one of the following conditions has to apply:
If any of the above conditions apply, you also add the full cost of all additions and alterations to the building to Class 6.
If none of the above conditions apply, include the building in Class 6 if one of the following conditions applies:
Also included in Class 6 are certain greenhouses and fences.
For additions or alterations to such a building:
Class 8 with a CCA rate of 20% includes certain property that is not included in another class. Examples include furniture, appliances, tools costing $500 or more per tool, some fixtures, machinery, outdoor advertising signs, refrigeration equipment, and other equipment you use in business.
Photocopiers and electronic communications equipment, such as fax machines and electronic telephone equipment are also included in Class 8. Also include in Class 8 data network infrastructure equipment and systems software for that equipment acquired before March 23, 2004. If acquired after March 22, 2004, include it in Class 46.
If this equipment cost $1,000 or more, you can elect to have it included in a separate class. The CCA rate will not change but a separate CCA deduction can now be calculated for a five-year period. When all the property in the class is disposed of, the UCC is fully deductible as a terminal loss. Any undepreciated capital cost (UCC) balance remaining in the separate class at the end of the fifth year has to be transferred back to the general class in which it would otherwise belong. To make an election, attach a letter to your income tax return for the tax year in which you acquired the property.
Include in Class 10 with a CCA rate of 30% general-purpose electronic data-processing equipment (commonly called computer hardware) and systems software for that equipment, including ancillary data-processing equipment, if you acquired them before March 23, 2004, or after March 22, 2004, and before 2005, and you made an election.
Also include in Class 10 motor vehicles as well as some passenger vehicles as defined in Type of vehicle.
Include passenger vehicles in Class 10 unless they meet the Class 10.1 condition.
Your passenger vehicle can belong in either Class 10 or Class 10.1. To determine the class your passenger vehicle belongs, you have to use the cost of the vehicle before you add the GST and the PST, or the HST.
Include your passenger vehicle in Class 10.1 if you bought it in your 2012 fiscal period and it cost more than $30,000. List each Class 10.1 vehicle separately.
We consider the capital cost of a Class 10.1 vehicle to be $30,000 plus the related GST and PST, or HST. The $30,000 amount is the capital cost limit for a passenger vehicle.
Use the GST rate of 5% and the appropriate PST rate for your province or territory. If your province is a participating province, use the HST.
Daniel owns a sporting goods retail business. On July 21, 2012, he bought two passenger vehicles to use in his business. The PST rate for his province is 8%. Daniel noted these details for 2012:
Daniel puts Vehicle 1 in Class 10.1, since he bought it in 2012 and it cost him more than $30,000. Before Daniel enters an amount in column 3 of Area B, he has to calculate the GST and PST on $30,000. He does this as follows:
GST at 5% of $30,000 = $1,500; and
PST at 8% of $30,000 = $2,400.
Therefore, Daniel's capital cost for Vehicle 1 is $33,900 ($30,000 + $1,500 + $2,400). He enters this amount in column 3 of Area B of Form T2125.
Daniel puts Vehicle 2 in Class 10, since he bought it in 2011 and it did not cost him more than $30,000.
Daniel's capital cost for Vehicle 2 is $31,640 ($28,000 + $1,400 + $2,240). He enters this amount in column 3 of Area B of Form T2125.
Class 12 includes china, cutlery, linen, uniforms, dies, jigs, moulds, cutting or shaping parts of a machine, tools, computer software (except systems software). Also included are video-cassettes, video-laser discs, and digital video disks that you rent and do not expect to rent to any person for more than 7 days in a 30 day period.
The cost limit for access to the Class 12 (100%) treatment is $500 for:
However, if the tools, medical or dental instruments and kitchen utensils cost $500 or more, include the cost in Class 8.
You can elect to put in Class 29 eligible machinery and equipment used in Canada for the manufacture and process of goods for sale or lease, acquired after March 18, 2007, and before 2014, that would otherwise be included in Class 43. To make an election, attach a letter to your income tax return for the tax year you bought the property indicating you are electing to put the property in Class 29. Regular Class 43 treatment will apply to these eligible assets that are acquired after 2013.
Calculate CCA using the straight line method as follows: claim up to 25% in the first year, 50% in the second year, and the remaining 25% in the third year. Any amount not claimed in a year can be claimed in a later year.
Include in Class 38 most power-operated and movable equipment you bought after 1987 that was used for excavating, moving, placing or compacting earth, rock, concrete or asphalt.
You can choose to keep in a separate class any assets, including an outdoor advertising sign, you would usually include in class 38. To make this choice, attach a list of the assets you are including in a separate class to your income tax and benefit return for the year you bought these assets.
Include in Class 43 with a CCA rate of 30% eligible machinery and equipment, used in Canada for the manufacture and process of goods for sale or lease, that are not included in Class 29.
You can put this property in a separate class if you file an election by attaching a letter to your income tax return for the year in which you acquired the property. For information on separate class elections, see note in Class 8 (20%).
Include general-purpose electronic data-processing equipment (commonly called computer hardware) and systems software for that equipment, including ancillary data processing equipment, in Class 45 with a CCA rate of 45% if you acquired them after March 22, 2004, and before March 19, 2007.
If you acquired the equipment or software before 2005 abd made the seperate Class 8 election, as discussed in the Class 8 note, the property does not qualify for the 45% rate.
Include in Class 46 with a CCA rate of 30% data network infrastructure equipment and systems software for that equipment if they were acquired after March 22, 2004. If they were acquired before March 23, 2004, include them in Class 8.
Include in Class 50 with a CCA rate of 55% property acquired after March 18, 2007, that is general-purpose electronic data processing equipment and systems software for that equipment, including ancillary data processing equipment, but not including property that is included in Class 29 or Class 52 or that is mainly or is used mainly as:
Include in Class 52 with a CCA rate of 100% (with no half year rule) general-purpose electronic data processing equipment (commonly called computer hardware) and systems software for that equipment, including ancillary data processing equipment if they were acquired after January 27, 2009, and before February 2011, but not including property that is mainly or is used mainly as:
To qualify for this rate the asset must also:
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