Language selection

Government of Canada / Gouvernement du Canada

Search

Sign in

Sign in

Capital cost allowance (CCA)

You cannot deduct the cost of a property, such as a vehicle or musical instrument that you use to earn your income. However, you can deduct a percentage of the property's cost. The part of the cost you can deduct or claim is called depreciation or, for income tax purposes, capital cost allowance (CCA).

On this page

Claiming CCA

If you are an employee earning commission income, you can claim CCA on your vehicle if you meet the employment conditions.

If you are an employee earning a salary, you can claim CCA on your vehicle if you meet the conditions outlined in Allowable motor vehicle expenses.

If you are an employed musician, you can claim CCA on a musical instrument if you had to provide the musical instrument as a condition of employment.

You do not have to claim the maximum amount of CCA in any given year. You can claim any amount you want, from zero up to the maximum allowed for the year.

For more information on CCA, read Archived Interpretation Bulletin IT522R, Vehicle, Travel and Sales Expenses of Employees.

Definitions

You may need to know the meaning of certain terms before you can determine your claim for CCA.

Classes of depreciable properties

Depreciable properties are usually grouped into classes. To claim CCA, you should know about the following classes.

Classes 54 and 55 (zero-emission vehicles)

There are two CCA classes for zero-emission vehicles (ZEV):

  • Class 54 for ZEVs, including zero-emission passenger vehicles, excluding taxicabs and motor vehicles used for lease and rent

    The CCA rate for this class is 30%. However, an enhanced first year deduction may apply for certain eligible ZEVs acquired after March 18, 2019, and under proposed changes, before 2025, that become available for use before 2028.

    Under proposed changes, an enhanced first year deduction (up to a maximum of 100%) may apply for certain ZEVs acquired after 2024, that become available for use before 2034.

    For Class 54, the capital cost was deductible up to a limit of $61,000 plus sales tax for 2023 and 2024, and will remain the same for 2025, for zero-emission passenger vehicles. For 2022, the deductible limit was $59,000 and for 2019 to 2021, it was $55,000. The limit will be reviewed annually and special rules will apply in the year of disposition for such vehicles where the capital costs exceed that limit. Read Column 6 – Proceeds of dispositions in the year.

  • Class 55 for ZEVs that are motor vehicles used for lease or rent or taxicabs

    The CCA rate for this class is 40%, However, an enhanced first year deduction may apply for certain eligible ZEVs acquired after March 18, 2019, and under proposed changes, before 2025, that become available for use before 2028.

    Under proposed changes, an enhanced first year deduction (up to a maximum of 100%) may apply for certain ZEVs acquired after 2024, that become available for use before 2034.

Eligibility criteria for zero-emission vehicles

To be eligible under Class 54 or Class 55, a zero-emission vehicle needs to meet all the following criteria:

  • It is a ZEV acquired after March 18, 2019 or a used ZEV acquired after March 1, 2020 that became available for use before 2028, or under proposed changes before 2034, and included in Class 54 or 55
  • An amount has not been paid by the Government of Canada under the federal purchasing incentive
  • It is a vehicle that was not subject to a prior CCA or terminal loss claim, it cannot have been acquired by a taxpayer on a tax-deferred rollover basis, nor previously owned or acquired by the taxpayer or a non-arm's length person or partnership
  • It is essentially a motor vehicle for use on streets and highways (excluding a trolley bus or vehicle operated exclusively on rails)
  • It is a plug-in hybrid with battery capacity of at least 7 kWh or is fully powered by one of the following:
    • electric
    • hydrogen

Enhanced first-year CCA

An enhanced first-year CCA with the following phase-out period is available for property that became available for use:

  • 100% after March 18, 2019, and before 2024
  • 75% after 2023 and before 2026
  • 55% after 2025 and before 2028

Under proposed changes, the above phase-out period only applies to property acquired after March 18, 2019 and before 2025.

Also, under proposed changes, the enhanced first-year CCA deduction is reinstated for ZEVs under Classes 54 and 55 acquired after 2024. To be eligible, qualifying property has to be acquired and become available for use on or after January 1, 2025, and before 2034. The reinstated deduction is subject to the following phase-out period based on when the property becomes available for use:

  • 100% on or after January 1, 2025, and before 2030
  • 75% after 2029 and before 2032
  • 55% after 2031 and before 2034

Calculating the CCA for the enhanced first year allowance

For the enhanced first year allowance, the following steps should be taken for calculating the CCA:

Step 1. Increase the net capital cost addition to the class as follows (see columns 9 and 11)
  • For Class 54

    If the property is acquired and becomes available for use before 2028 (under proposed changes, is acquired before 2025), increase the capital cost addition by an amount equal to:

    • 2 1/3 times the net addition to the class for property that becomes available for use before 2024
    • 1 1/2 times the net addition to the class for property that becomes available for use in 2024 or 2025
    • 5/6 times the net addition to the class for property that becomes available for use after 2025 and before 2028

    Under proposed changes, if the property is acquired after 2024 and becomes available for use before 2034, increase the capital cost addition by an amount equal to:

    • 2 1/3 times the net addition to the class for property that becomes available for use before 2030
    • 1 1/2 times the net addition to the class for property that becomes available for use in 2030 or 2031
    • 5/6 times the net addition to the class for property that becomes available for use after 2031 and before 2034
  • For Class 55

    If the property is acquired and becomes available for use before 2028 (under proposed changes, is acquired before 2025), increase the capital cost addition by an amount equal to:

    • 1 1/2 times the net addition to the class for property that becomes available for use before 2024
    • 7/8 times the net addition to the class for property that becomes available for use in 2024 or 2025
    • 3/8 times the net addition to the class for property that becomes available for use after 2025 and before 2028 

    Under proposed changes, if the property is acquired after 2024 and becomes available for use before 2034, increase the capital cost addition by an amount equal to:

    • 1 1/2 times the net addition to the class for property that becomes available for use before 2030
    • 7/8 times the net addition to the class for property that becomes available for use in 2030 or 2031
    • 3/8 times the net addition to the class for property that becomes available for use after 2031 and before 2034
Step 2. Suspend the existing CCA half-year rule

The CCA will be applicable on any remaining balance in the classes using the specific rate for the class.

How to calculate CCA

The following information will help you complete Part A and Part B of the CCA schedule on Form T777, Statement of Employment Expenses.

If this is the first year you are claiming CCA, skip column 2, and start with column 3. If this is not the first year you are claiming CCA, start with column 2 and complete the rest of the columns as they apply.

Part A – Classes 8, 10, 54, and 55 property

  • Column 2 – Undepreciated capital cost at the start of the year

    If you claimed CCA in any previous year, record in this column the undepreciated capital cost (UCC) of the property at the end of last year. If you completed Part A of Form T777 in 2024, you would have recorded this amount in column 13. However, if you received a GST/HST rebate for a vehicle or musical instrument in 2025, you have to reduce your opening UCC by the amount of the rebate.

  • Column 3 – Cost of additions in the year

    If you acquired depreciable property in 2025, enter the total capital cost of the property on the appropriate line.

    If you owned property for personal use and then started using it for employment in 2025, there is a change in use. In most cases when this happens, the amount you will enter in column 3 is the fair market value of the property at the time you start using the property for employment.

    For example, you bought a car in 2018 for $19,000. In 2025, you started using it for employment. By checking car dealerships and the newspapers, you determine its fair market value is $11,000. Therefore, you enter $11,000 in column 3.

    To determine what class your passenger vehicle belongs to, use the price of the car before you add GST and any PST or HST. Once you have determined in which class your vehicle belongs to, add the GST and PST or HST that you paid to the vehicle’s capital cost.

    For example, in 2025, you bought a passenger vehicle for $35,000 plus HST of $4,550. Your vehicle belongs in Class 10 even though its capital cost is $39,550 ($35,000 + $4,550), since your cost before the HST was $35,000. You would enter $39,550 in column 3 for Class 10 property.

    For information on Class 10.1 property, see Part B – Class 10.1.

  • Column 4 – Cost of additions which are accelerated investment incentive properties (AIIPs) or zero-emission vehicles (ZEVs) acquired before 2025

    Enter in column 4 the cost of additions that are AIIPs or ZEVs (Class 54 or 55) that were, under proposed changes, acquired before 2025, and became available for use in the year. This cost is a part of the total cost of additions in column 3 and cannot be higher than the number in column 3.

    If no AIIP or ZEV were, under proposed changed, acquired before 2025, and became available for use in the year, enter “0” in this column.

    To be eligible for the accelerated investment incentive, or the enhanced CCA deduction for ZEV, the property must become available for use in the year.

    Under proposed changes, to be an AIIP, a property has to be acquired before 2025.

    For more information on the accelerated investment incentive and how it impacts your CCA calculation, see Accelerated investment income.

  • Column 5 – Cost of additions from column 3 that are RIIP or ZEV acquired after 2024

    Under proposed changes, enter in this column the cost of additions that are RIIP or ZEV (Class 54 or 55) that were acquired after 2024 and that became available for use in the year. This cost is part of the total cost of additions included in column 3 and cannot be higher than the amount in column 3.

    A RIIP generally means a property, other than a zero-emission vehicle included in Classes 54 and 55, acquired after 2024, and that becomes available for use before 2034.

    To be eligible for the reaccelerated investment incentive or the enhanced CCA deduction for ZEV, the property must become available for use in the year.

    If no RIIP or no ZEV were acquired after 2024, and became available for use in the year, enter “0” in this column.

  • Column 6 – Proceeds of disposition in the year

    For depreciable property you disposed of in 2025, enter the lesser of:

    • the proceeds of disposition of the property, minus the related outlays and expenses
    • the capital cost of the property

    The proceeds of disposition of a zero-emission passenger vehicle that has been included in Class 54 and that is subject to the $61,000 capital cost limit will be adjusted based on a factor equal to the capital cost limit of $61,000 as a proportion of the actual cost of the vehicle.

    For dispositions after July 29, 2019, the actual cost of the vehicle will also be adjusted for any payments or repayments of government assistance that you may have received or repaid for the vehicle.

  • Column 7 – Undepreciated capital cost after additions and dispositions

    Enter the amount you get after you add column 2 to column 3 and subtract column 6.

    You cannot claim CCA when the amount in this column is one of the following:

    • negative (recapture)
    • positive and you do not have any property in the class at the end of the year (terminal loss)

    Recapture of capital cost allowance – If the amount in column 7 is negative, you have a recapture of CCA. Include the amount as income on line 10400 of your income tax and benefit return for 2025.

    Terminal loss – If the amount in column 7 is positive and you no longer own any property in that class, you have a terminal loss. You cannot deduct the terminal loss from employment income.

  • Column 8 – Proceeds of dispositions available to reduce additions of AIIP,  RIIP, or ZEV

    This column calculates the adjustments under certain circumstances to the additions for the year where there is also a disposition in the year.

    When an AIIP and a property that is neither an AIIP nor, under proposed changes, a RIIP of the same class are purchased during the year and a disposition occurs, the disposition first reduces the UCC of the property that is neither an AIIP nor, under proposed changes, a RIIP before reducing the UCC of the AIIP.

    Under proposed changes, when a RIIP and a property that is neither a RIIP nor an AIIP of the same class are purchased during the year and a disposition occurs, the disposition also reduces the UCC of the property that is neither a RIIP nor an AIIP before reducing the UCC of the RIIP.

    To determine which portion of your proceeds of dispositions, if any, will reduce the cost of your AIIP or ZEV (or, under proposed changes, RIIP) additions, take proceeds of disposition in column 6 minus the cost of additions in the year in column 3 plus the cost of additions for AIIP or ZEV acquired before 2025 in column 4 plus, under proposed changes, the cost of additions for RIIP or ZEV acquired after 2024 in column 5. If the result is negative, enter “0.”

    If no AIIP or ZEV (or, under proposed changes, RIIP) were acquired, you do not need to use this column.

  • Column 9 – UCC adjustment for current-year additions of AIIP and ZEV acquired before 2025

    This column calculates the enhanced UCC amount used to determine the additional CCA for AIIP or ZEV acquired before 2025 that became available for use in the year.

    For this column, reduce the cost of AIIP or ZEV additions in column 4 by proceeds of disposition available to reduce the AIIP or ZEV (or, under proposed changes, RIIP) additions as calculated in column 8. Multiply the result by the following factor:

    • 1 1/2 for property in Classes 54
    • 7/8 for property in Class 55
    • nil for AIIP in Class 8 or 10

    These factors will change for properties that become available for use after 2025 and the incentive is completely phased out for properties available for use after 2027.

    If no AIIP or no ZEV were acquired, enter "0" in this column.

  • Column 10 – Proceeds of dispositions available to reduce additions of RIIP and ZEV acquired after 2024

    Under proposed changes, this column calculates the adjustments under certain circumstances to the additions of RIIP and ZEVs acquired after 2024 for the purposes of calculating CCA for the year where there is also a disposition in the year.

    Under an administrative position, the CRA allows the proceeds of disposition that reduce AIIP, RIIP, and ZEV additions from column 8 to reduce the additions of AIIP, RIIP, and ZEVs acquired before 2025 first, with any remaining amount reducing the additions of RIIP and ZEVs acquired after 2024.

    To determine which part of your proceeds of dispositions, if any, will reduce your RIIP or ZEV additions acquired after 2024, subtract the cost additions that are AIIP or ZEV acquired before 2025 in column 4 from the proceeds of disposition available to reduce additions of AIIP, RIIP, and ZEVs in column 8. If the result is negative, enter “0.”

    If no RIIP or no ZEV were acquired, enter “0” in this column.

  • Column 11 – UCC adjustment for current-year additions of RIIP and ZEV acquired after 2024

    Under proposed changes, this column calculates the enhanced UCC amount used to determine the additional CCA for RIIP and ZEVs acquired after 2024.

    For this column, reduce the cost of RIIP or ZEV additions in column 5 by the proceeds of disposition available to reduce the AIIP, RIIP, or ZEVs acquired after 2024 additions as calculated in column 8. Multiply the result by the following factors:

    • 1/2 for RIIP in Class 8 or 10
    • 2 1/3 for Class 54
    • 1 1/2 for Class 55

    If no RIIP or no ZEVs were acquired, enter “0” in this column.

  • Column 12 – Adjustments for current year additions subject to half-year rule

    You can only claim CCA on 50% of your net additions (additions minus dispositions) of Class 8 or Class 10 properties in 2025. This is known as the 50% rule. The 50% rule does not apply to AIIPs or ZEVs (or, under proposed changes, RIIP). Calculate the net first year additions that are subject to the 50% rule by entering 50% of the amount you get when you subtract column 6, column 5 and column 4 from column 3. If the result is negative, enter “0” in column 12.

  • Column 13 – Base amount for capital cost allowance

    Enter the amount you get when you subtract column 12 from column 7 plus column 9 plus column 11. Base your CCA claim, if any, on the amount in this column. You can only claim CCA on the balance remaining in column 13 when the amount is positive and you still have property in the class at the end of the year.

  • Column 15 – Capital cost allowance for the year

    You can only claim CCA if you were still using the property for employment at the end of 2025. If you started using a property for employment part way through the year, you can claim CCA on the property for the full year. You do not have to limit your CCA claim to the part of the year you used the property for employment, the 50% rule is there for that. If you stopped using the property for employment during the year and there is no property left in the class, you cannot claim any CCA on the property for the year.

    Enter the CCA you want to claim for 2025. The most you can claim for a Class 10 property is 30% of the amount in column 13. The most you can claim for a Class 8 property is 20% of the amount in column 13.

  • Column 16 – Undepreciated capital cost at the end of the year

    Enter the amount you get when you subtract column 15 from column 7. This is your UCC at the end of 2025.

Part B – Class 10.1 property

List each Class 10.1 vehicle on a separate line.

  • Column 2 – Undepreciated capital cost at the start of the year

    If you claimed CCA in any previous year for a Class 10.1 vehicle, record in this column the undepreciated capital cost (UCC) of that vehicle at the end of last year. For instance, if you completed Part B of Form T777 in 2024, you would have recorded this amount in column 8. However, if you received a GST/HST rebate for that vehicle in 2025, you have to reduce your opening UCC by the amount of the rebate.

  • Column 3 – Cost of additions in the year

    To determine what class your passenger vehicle belongs to, use the price of the car before you add the GST and any PST or HST. However, include the GST and PST or HST, in the vehicle’s capital cost.

    If you owned a passenger vehicle for personal use and then started using it for employment in 2025, there is a change in use. In most cases when this happens, the amount you will enter in column 3 is the fair market value of the property at the time you start using the property for employment.

    For a passenger vehicle you acquired in 2025 that cost you more than $38,000 before GST and PST or HST no matter how much more than $38,000 it cost, the amount you record is $38,000 plus the GST and PST or HST that you would have paid on $38,000.

    For example, if you bought a passenger vehicle in 2025 that cost $38,000 before the GST and PST or HST, your vehicle belongs in Class 10.1. Assume the HST on $38,000 is $4,940. Your capital cost is $42,940 ($38,000 + $4,940). You enter $42,940 in column 3.

    There is a limit on the capital cost of a Class 10.1 vehicle you buy from a person with whom you have a non-arm’s-length relationship. Generally, such a relationship happens when the person from whom you acquire the vehicle is a relative. A non-arm's length relationship can also happen in certain business relationships.

    In this case, the capital cost is the least of the following three amounts:

    • the fair market value of the vehicle when you acquired it
    • $38,000 plus the GST and PST or HST that you would have paid on $38,000 if you had acquired the vehicle in 2025
    • the seller’s cost of the vehicle just before you acquired it. The cost can vary depending on what the seller used the vehicle for before you acquired it. If the seller used the vehicle to earn income, the cost will be the UCC of the vehicle just before you acquired it. When the seller was not using the vehicle to earn income, the cost will usually be the original cost of the vehicle
  • Column 4 – Proceeds of disposition in the year

    For a Class 10.1 vehicle you disposed of in 2025, record the lesser of:

    • the proceeds of disposition of the property minus the related outlays and expenses
    • the capital cost of the vehicle
  • Column 5 – Base amount for capital cost allowance

    Base your CCA claim, if any, on the amount in this column.

    If you owned the vehicle in 2025 and still owned it at the end of 2025, enter in column 5 the same amount you entered in column 2.

    If you owned a Class 10.1 vehicle, that became available for use in the current year and you still owned it at the end of the current year, that is not an AIIP (or, under proposed changes, a RIIP), you can only claim CCA on 50% of the capital cost. This is known as the 50% rule. If you acquired a Class 10.1 vehicle in 2025 that is not AIIP and you still owned the vehicle at the end of 2025, enter 50% of the amount in column 3 in column 5.

    The 50% rule does not apply to AIIP. If the vehicle is an AIIP that became available for use in the current year and you still owned it at the end of the current year, enter 100% of the amount from column 3 in column 5.

    Under proposed changes, if the vehicle is a RIIP that became available for use in the current year, and you still owned it at the end of the current year, enter 3/2 of the amount from column 3 in column 5. If you acquired and disposed of the same Class 10.1 vehicle in 2025, enter “0” in column 5.

    For a Class 10.1 vehicle you disposed of in 2025, you may be able to claim 50% of the CCA that would be allowed if you had still owned the vehicle at the end of the year. This is known as the half-year rule on sale.

    You can use the half year rule if you owned, at the end of 2024, the Class 10.1 vehicle you sold in 2025. If you meet this condition, enter 50% of the amount from column 2 in column 5.

  • Column 7 – CCA for the year

    Claim CCA if you were still using the vehicle for employment at the end of 2025. If you started using a vehicle for employment part way through the year, you can claim CCA on the vehicle for the full year. You do not have to limit your CCA claim to the part of the year that you used the vehicle for employment.

    Record the CCA you want to claim for 2025. The most you can claim is 30% of the amount in column 5.

  • Column 8 – UCC at the end of the year

    Calculate the undepreciated capital cost at the end of 2025 as follows:

    • For a Class 10.1 vehicle you owned in 2024 and still owned at the end of 2025, enter the amount you get after you subtract the amount in column 7 from the amount in column 2
    • For a Class 10.1 vehicle you acquired during 2025 and still owned at the end of 2025, enter the amount you get after you subtract the amount in column 7 from the amount in column 3
    • For a Class 10.1 vehicle you disposed of during 2025, enter “0” in column 8. The recapture and terminal loss rules do not apply to a Class 10.1 vehicle

Completing your tax return

Calculate your CCA claim using Form T777, Statement of Employment Expenses.

Enter the amount you can deduct from the Total expenses line (9368) of Form T777 on line 22900 of your return.

Forms and publications

Page details

2026-04-22