There are many classes of capital cost allowance
(CCA). Lists of many of the classes, as well as
information on calculating capital cost allowance, can be
found in the following Canada Revenue Agency guides and bulletin:
Business
and Professional Income Guide (T4002) for
unincorporated businesses has CCA rates (Chapter
4) as well as a
table which explains how to determine if a cost is an
expense or should be capitalized (Chapter 3 - current
or capital expenses?).
Rental
Income Tax Guide (T4036) lists some of the classes
which are more likely to be used by someone with a
rental property.
For most capital additions in the year, you can only claim
CCA on one-half of your net additions to the CCA class in the year. The
net additions amount is the
cost of additions in the year less the lower of cost or proceeds for
disposition for assets disposed of during the year.
Some additions are not subject to the half-year rule.
These include additions in classes 13, 14, 23, 24, 27, 29, 34, and 52, as well
as most of the additions to Class 12.
Class 12, which has a CCA rate of 100%, includes a variety
of assets, including small tools, kitchen utensils, and medical or dental
instruments costing less than $200 (less than $500 under proposed changes), as well as linens, uniforms, computer
software and other items. The half-year rule does not apply to most
items in Class 12,
allowing 100% write-off in the year of acquisition. The only items in
Class 12 to which the half-year rule does apply are:
a die, jig, pattern, mould or last
the cutting or shaping part in a machine
a motion picture film or video tape that is a
television commercial message
Budget 2010: Accelerated CCA for Clean Energy
Generation
Accelerated CCA for Clean Energy Generation
Budget 2010 proposes to expand Class 43.2 to include:
heat recovery equipment used in a broader range of
applications; and
distribution equipment used in district energy
systems that rely primary on ground source heat pumps, active solar
systems or heat recovery equipment.
Class 43.2 provides accelerated capital cost allowance
at a rate of 50% per year on a declining balance basis. Class 43.1
also provides accelerated CCA, at the rate of 30% per year, for assets
acquired before February 23, 2005. A higher efficiency standard is
required for Class 43.2 than for Class 43.1 Systems that only meet
the lower efficiency standard are eligible for Class 43.1.
These measures will apply to eligible assets acquired
on or after March 4, 2010 that have not been used or acquired for use
before that date.
Distribution Equipment of a District Energy System
Budget 2010 proposes to broaden Class 43.1 and Class 43.2
to include certain specified distribution equipment which is part of a
district energy system used by the taxpayer to provide district heating or
cooling through the use of thermal energy.
Canadian Renewable and Conservation Expenses -
Principal-Business Corporations
Budget 2010 proposes that the definition
"principal-business corporation" be amended to clarify that
flow-through share eligibility extends to corporations the principal
business of which is one, or any combination, of:
The 50% straight-line accelerated CCA rate for investment in manufacturing or
processing machinery and equipment will be extended to 2010 and 2011.
Businesses will be allowed 100% CCA for computers (Class 52) in the first year that CCA
deductions are available. This is a temporary two-year measure, for
purchases after January 27, 2009 and before February 2011. Purchases that
are made after January 2011 will again use Class 50, which has a rate of 55%.
Manufacturing and processing sector - accelerated
CCA treatment for investment in machinery and
equipment will be extended for three years. The 50%
straight-line accelerated CCA will be extended for one year, and the
accelerated treatment will then be provided on a declining basis over
a period of 2 years.
CCA rates to be increased for carbon dioxide
pipelines.
Accelerated CCA for clean- energy generation
equipment to be expanded to include additional applications involving
ground source heat pump and waste-to-energy systems.
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