This chart assumes complete use of capital cost allowance during each year. UCC stands for “remaining undepreciated capital cost” and CCA for “capital cost allowance”.
Use the explanation below this calculator to determine the CRA class of your capital asset. Then use the calculator to calculate the maximum allowable capital depreciation for that asset. Only use as much of your capital cost allowance (CCA) as is reducing your payable tax. Any unclaimed CCA will be available to reduce your payable tax in future years. When you sell your asset, do not forget to consider any CCA you have claimed when calculating your capital gain/loss. Please refer to the Canada Revenue Agency (CRA) explanation of capital asset classes for further details.
|Table of Capital Depreciation Rates|
|1||4%||Building acquired after 1987|
|3||5%||Building acquired before 1988|
|8||20%||Miscellaneous capital tools|
|10||30%||Pre 2005 computers and low-cost vehicles|
|10.1||30%||High-cost motor vehicles|
|14||Varies||Patent and similar non-tangible capital assets|
|16||40%||Taxi, car, rental vehicle, etc.|
|29||Varies||Machinery and equipment for manufacturing and processing|
|43||30%||Machinery and equipment for manufacturing and processing|
|43.1||30%||Electrical vehicle charging stations, 10-90 kW|
|43.2||50%||Electrical vehicle charging stations 90 kW+|
|44||Varies||Patents or a licence to use patents|
|45||45%||Electronic data processing equipment|
|46||30%||Data network infrastructure equipment|
|50||55%||Electronic data processing equipment|
|52||100%||Electronic data processing equipment|
|53||50%||Machinery and equipment for manufacturing and processing|
Class 1, building acquired after 1987, includes two subclasses. The first subclass includes non-residential buildings acquired after March 2007 and used to process or manufacture goods in Canada. This subclass qualifies for an additional 6% per annum depreciation rate. The second subclass includes non-residential buildings acquired after March 2007 but does not fit in the first subclass; this subclass qualifies for an additional 2% per annum depreciation rate. To use the additional rates for a building, you must elect to put it in a separate class while filing your taxes for the year you acquired the building.
Class 3 includes buildings acquired before 1988 which do not fit into class 6. Also, a building acquired before 1990 belongs to class 3 if you were building it or agreed to purchase it before June 1987. Cost of additions less than 25% to a class 3 building would stay in class 3, while the cost of large additions to class 3 buildings would be categorized in class 1.
A building made of frame, log, stucco on the frame, galvanized iron or corrugated metal, which has one of the following conditions:
The cost of all additions/alterations belongs to class 6 if the building has one of conditions 1-3.
Properties not included in other classes belong to class 8; for example, furniture, appliances, tools costing $500 or more, some fixtures, machinery, outdoor advertising signs, refrigeration and other equipment used in the business. Also, photocopiers, electronic communications equipment, data network infrastructure equipment and systems software for that equipment acquired before March 23, 2004, are included in class 8. Cold storage facilities and silos also belong to class 8.
Computers, their operating system software, and ancillary equipment were acquired before March 2004 or after March 2004 but before 2005, and you made an election for them to belong to class 10. Class 10 also includes motor and passenger vehicles that do not belong to class 10.1.
If you buy your passenger vehicle for more than $30,000 (excluding sales tax), it should constitute a class 10.1 by itself. The capital cost limit for a passenger vehicle is $30,000. So a class 10.1 always starts as $30,000+HST or $30,000+GST+PST.
If you acquired a tool which cost less than $500 after May 2006, that tool belongs to class 12. Cultural products which you rent but generally no longer than seven days in every 30 days to one person. Software other than the operating system is also included in class 12.
Class 14 includes patents, franchises, concessions, or licences which are valid for a limited period of time. Divide the capital cost of the property in this class by its life to come up with CCA.
Class 14.1 mainly consists of goodwill, for example, milk and egg quotas, franchises, concessions and licences. Please see CRA explanations for details.
This class includes taxis, rental cars, coin-operated video games and pinball machines acquired after February 1984, and trucks with a capacity equal to or greater than 26000 lbs.
Machinery and equipment acquired between March 2007 and 2016 for manufacturing and processing of goods. Use a straight-line method for depreciation of this class.
Class 43 includes machinery and equipment used in Canada for processing and manufacture of goods which are not included in classes 29 or 53.
This class includes electric vehicle charging stations (EVCSs) with a capacity between 10 kW and 90 kW, acquired after March 2016. It also contains geothermal heat recovery equipment acquired after March 2017.
Patents or licenses to use a patent acquired after April 1993 are placed in class 44. You can ask CRA not to include such properties in class 44.
Electronic data-processing equipment and their systems software, which were acquired between March 2004 and March 2007, are placed in Class 45.
Data network infrastructure equipment and their systems software acquired before March 2004.
General-purpose electronic data processing equipment, their operating software, and their ancillary data processing equipment would belong to class 50 if they are acquired after March 2007.
For other classes please see CRA explanations.
There has been a significant increase in our living standards over the last two centuries. This increase in the standard of living is primarily due to a rise in labour productivity. The increase in labour productivity itself emanates from two sources. The first source is the result of the division of labour, while the second is the result of capital accumulation. Accumulated capital can be in many forms. It can be in the form of buildings enabling goods and services production. It can be in the form of infrastructure which allows trade and specialization of labour, in the form of machinery and equipment enabling production of goods or services, in the form of computers controlling and facilitating the production process, software enabling this control and most importantly, human capital.
Land, labour, capital and entrepreneurship are factors of production. Land includes both land and what comes from land; in other words, land as a factor of production consists of all given to us by nature. Capital as a factor of production includes what humans build to produce other goods or services. Unfortunately, this factor depreciates. Buildings, machines and tools wear down, computers and software become outdated, and a human's knowledge and skill might become obsolete. Each form of capital would depreciate uniquely, depending on location and time. If you need to have a realistic measure of the cost of production for any good or service, you should factor in the unique depreciation of the capital assets used in its production.
Any business filing its income tax should determine its profit. A business should determine its cost of production to determine its profit. The cost of procuring capital assets is not a cost of production itself, as capital assets are not consumed in the production process. Instead, the depreciation of capital assets is a cost of production. The Canada Revenue Agency (CRA) has developed some approximate rules to calculate the depreciation of capital properties for tax and accounting purposes. On this page, we review these rules to avoid counting the depreciation of our capital as profit and overpaying our taxes. Note that use of CCA is not limited to corporations, if you have a rental unit you can use CCA in order to reduce your tax on rental income.
The Canada Revenue Agency has defined multiple classes of depreciable capital properties to approximate the depreciation of various capital properties. CRA assigns a depreciation rate to each class. You can assume each depreciable capital asset to depreciate by its undepreciated capital cost multiplied by its depreciation rate.
The treatment would differ in the tax year you acquired the capital asset. In the year of acquisition, allowed depreciation is half of which is calculated by the above formula. This reduction in allowable depreciation for the acquisition year is called the half-year rule.