Classes of depreciable property
Use form T2125, Statement of Business or Professional Activities, to calculate capital cost allowance (CCA) on your depreciable properties.
Capital cost allowance (CCA) classes
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;
- sprinkler systems;
- heating equipment;
- air-conditioning equipment (other than window units);
- elevators; and
Most land is not depreciable property. Therefore, when you acquire property, only include the cost that relates to the building in Part 13 and Part 11 of Form T2125. Enter on line 9923 in Part 16 the cost of all land 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.
Class 3 (5%)
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:
- you acquired the building under the terms of a written agreement entered into before June 18, 1987; or
- 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; and
- 25% of the building's capital cost (including the cost of additions or alterations to the building included in classes 3, 6,or 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 has no footings or other base supports below ground level; or
- the building is used to gain income from farming or fishing.
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:
- you entered into a written agreement before 1979 to acquire the building, and the footings or other base supports of the building were started before 1979; or
- 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 included in Class 6 are 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 over $100,000 made after 1978 and before 1988; and
- the part of the cost of additions or alterations over $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 over these limits.
Class 8 (20%)
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 costs $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.
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 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.
Class 10.1 (30%)
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 2016 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, 2016, he bought two passenger vehicles to use in his business. The PST rate for his province is 8%. Daniel noted these details for 2016:
Daniel puts Vehicle 1 in Class 10.1, since he bought it in 2016 and it cost him more than $30,000. Before Daniel enters an amount in column 3 of Part 11, 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 Part 12 of Form T2125.
Daniel puts Vehicle 2 in Class 10, since he bought it in 2016 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 Part 12 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, 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:
- 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 $500 or more, include the cost in Class 8.
Class 14.1 (5%)
Starting January 1, 2017, include in Class 14.1 property that:
- is goodwill;
- was eligible capital property (ECP) immediately before January 1, 2017 and is owned at the beginning of that day;
- is acquired after 2016, other than:
- property that is tangible or corporeal property;
- property that is not acquired for the purpose of gaining or producing income from business;
- property in respect of which any amount is deductible (otherwise than as a result of being included in class 14.1) in computing the income from the business;
- an interest in a trust;
- an interest in a partnership;
- a share, bond, debenture, mortgage, hypothecary claim, note, bill or other similar property; or
- property that is an interest in, or for civil law a right in, or a right to acquire, a property described in any of the above sub-bullets.
For tax years that end prior to 2027, properties included in class 14.1 that were acquired before January 1, 2017 will be allowed an additional CCA. Transitional rules will apply.
Properties that are included in class 14.1 and acquired after 2016 will be included in this class at a 100% inclusion rate with a 5% CCA rate on a declining-balance basis and the existing CCA rules will normally apply.
Property in this new class 14.1 is excluded from the definition of capital property for GST/HST purposes.
Include in Class 29 eligible machinery and equipment used in Canada primarily for the manufacture and process of goods for sale or lease acquired after March 18, 2007 and before 2016 that would otherwise be included in Class 43.
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.
Class 43 (30%)
Include in Class 43 with a CCA rate of 30% eligible machinery and equipment, used in Canada primarily for the manufacture and process of goods for sale or lease, that are not included in Class 29 or 53.
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%).
Class 43.1 (30%)
Include in Class 43.1 with a CCA rate of 30% electrical vehicle charging stations (EVCSs) set up to supply more than 10 kilowatts but less than 90 kilowatts of continuous power. This is for property acquired for use after March 21, 2016, that has not been used or acquired for use before March 22, 2016.
Class 43.2 (50%)
Include in Class 43.2 with a CCA rate of 50% electrical vehicle charging stations (EVCSs) set up to supply 90 kilowatts and more of continuous power. This is for property acquired for use after March 21, 2016, that has not been used or acquired for use before March 22, 2016.
Class 46 (30%)
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.
Class 50 (55%)
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 that is mainly or is used mainly as:
- electronic process control or monitor equipment;
- electronic communications control equipment;
- systems software for equipment referred to in 1. or 2.; or
- data handling equipment (other than data handling equipment that is ancillary to general-purpose electronic data processing equipment).
Class 53 (50%)
Include in Class 53 with a CCA rate of 50% eligible machinery and equipment that is acquired after 2015 and before 2026 (that would generally otherwise be included in Class 29) to be used in Canada primarily in the manufacturing or processing of goods for sale or lease.
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