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Classes of depreciable property

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.

Class 1 (4%)

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:

electrical wiring;
lighting fixtures;
plumbing;
sprinkler systems;
heating equipment;
air-conditioning equipment (other than window units);
elevators; and
escalators.

Note
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 details, 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 after 1987 to a Class 1 building or certain buildings of another class.

The CCA rate for eligible non-residential buildings acquired by a taxpayer after March 18, 2007, used for manufacturing or processing in Canada of 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 place the a building in a separate class. To make the election, attach a letter to your return for the tax year in which you acquired it. If you do not file an election to put it in a separate class, the rate of 4% will apply.

The additional allowance applies to buildings acquired after March 18, 2007, (including a new building, if any portion of it is acquired after March 18, 2007, where 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 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 for non-residential purposes at the end of the tax year.

Class 3 (5%)

Most buildings acquired before 1988 were 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:

You acquired the building under the terms of a written agreement entered into before June 18, 1987.
The building was under construction by you or for you on June 18, 1987.

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:

$500,000; or
25% of the building's capital cost (including the cost of additions or alterations to the building included in Class 3, Class 6, or Class 20 before 1988).

Any amount that exceeds the lesser amount above is included in Class 1.

Class 6 (10%)

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:

You acquired the building before 1979.
The building must be used to gain income from farming or fishing.
The building must have no footings or other base supports below ground level.

If any of the above conditions applies, you also add the full cost of all additions and alterations to the building to Class 6.

If none of the above conditions applies, include the building in Class 6 if one of the following conditions applies:

You entered into a written agreement before 1979 to acquire the building, and footings or other base supports of the building were started before 1979.
You started construction of the building before 1979 (or it was started under the terms of a written agreement you entered into before 1979), and footings or other base supports of the building were started before 1979.

Also include in Class 6 certain greenhouses and fences.

For additions or alterations to such a building:

add to Class 6:
- the first $100,000 of additions or alterations made after 1978;
add to Class 3:
- the part of the cost of all additions or alterations above $100,000 made after 1978 and before 1988; and
- the part of the cost of additions or alterations above $100,000 made after 1987, but only up to $500,000 or 25% of the cost of the building, whichever is less;
add to Class 1 any additions or alterations above these limits.

Class 8 (20%)

Class 8 with a CCA rate of 20% includes certain property that is not included in another class. Examples are furniture, appliances, tools costing $200 or more ($500 or more under proposed changes), 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.

Note
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 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.

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.

Class 10 (30%)

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, automobiles, and some passenger vehicles, as defined in Type of vehicle.

Include a passenger vehicle in Class 10 unless it meets a Class 10.1 condition.

Class 10.1 (30%)

Your passenger vehicle can belong to either Class 10 or Class 10.1. To determine the class to which your passenger vehicle belongs, you have to use the cost of the vehicle before you add GST and PST, or HST.

Include your passenger vehicle in Class 10.1 if you bought it in your 2009 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.

Note
Use the GST rate of 5% and the appropriate PST rate for your province or territory. If your province is a participating province, use HST.

Example
Daniel owns a sporting goods retail business. On July 21, 2009, he bought two passenger vehicles to use in his business. The PST rate for his province is 8%. Daniel noted these details for 2009:

	Cost	GST	PST	Total
Vehicle 1	$33,000	$1650	$2,640	$37,290
Vehicle 2	$28,000	$1400	$2,240	$31,640

Daniel puts Vehicle 1 in Class 10.1, since he bought it in 2009 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 into Class 10, since he bought it in 2009 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 (100%)

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, or digital video disks bought after December 12, 1995, that you rent and do not expect to rent to any person for more than 7 days in a 30 day period.

Under proposed changes, the cost limit for access to the Class 12 (100%) treatment will increase to $500 from $200 for:

tools acquired on or after May 2, 2006; and
medical or dental instruments and kitchen utensils acquired on or after May 2, 2006.

However, if the tools, medical or dental instruments and kitchen utensils cost $200 or more ($500 or more under proposed changes), include the cost in Class 8.

Tools eligible under this class specifically exclude electronic communication devices and electronic data processing equipment.

Class 45 (45%)

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.

Note
If you acquired the equipment or software before 2005 and made the separate Class 8 election, as discussed in the Class 8 note, the property does not qualify for the 45% rate.

Class 46 (30%)

Include in Class 46 with a CCA rate of 30% data network infrastructure equipment and systems software for that equipment if acquired after March 22, 2004. If acquired before March 23, 2004, include it in Class 8.

Class 50 (55%)

Include in Class 50 with a CCA rate of 55% general purpose electronic data processing equipment (commonly called computer hardware) and systems software for that equipment, including ancillary data processing equipment if acquired after March 18, 2007, and not included in Class 29 or Class 52.

Class 52 (100%)

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 acquired after January 27, 2009, and before February 2011. To qualify for this rate the asset must also:

be situated in Canada;
not have been used, or acquired for use, for any purpose before it is acquired by the taxpayer;
be acquired by the taxpayer:
- for use in a business carried on by the taxpayer in Canada or for the purposes of earning income from property situated in Canada; or
- for lease by the taxpayer to a lessee for use by the lessee in a business carried on by the lessee in Canada or for the purpose of earning income from property situated in Canada.

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