Ads keep this website free for you. does not research or endorse any product or service appearing in ads on this site.  Before making a major financial decision you  should consult a qualified professional.

Capital Cost Allowance
Canadian Tax and
Financial Information

If you use an ad blocker, please consider a small contribution to help keep free for everyone.

Need an accounting, tax or financial advisor? Look in our Directory.  Use above search box to easily find your topic!   Stay Connected with!
What's New
Personal Tax
Sales Taxes
Financial Freedom
Financial Planning
Real Estate
British Columbia
Atlantic Provinces
Federal Budget
Prov/Terr Budgets
Statistics etc.
Site Map
Advertise With Us
Contact Us/About Us
Links & Resources
Business -> Capital Cost Allowance (CCA) and Rates

Capital Cost Allowance

Income Tax Act s. 20(1)(a), Regulations Parts XI, XVII

Capital cost allowance (CCA) is the depreciation that is allowed to be expensed for tax purposes for fixed assets, except land.  Different types of assets are allocated to different CCA classes, and each class has its own rate for capital cost allowance.  For instance, most automobiles would be class 10, which is expensed at 30% per year on a declining balance basis.  In most cases, the CCA allowed in the year an asset is purchased is only 50% of the normal amount - this is the "half-year" rule.  Thus, the class 10 CCA would be 15% in the first year.  See below for more information on the half-year rule.

Immediate Expensing for CCPCs, of Certain Capital Assets

As proposed by the 2021 Federal Budget:

bullettemporary measure
bulletfor eligible property acquired by a Canadian-Controlled Private Corporation (CCPC) on or after April 19, 2021
bulletmust be available for use before January 1, 2024
bulletavailable for the year in which the property becomes available for use
bulletmaximum amount of $1.5 million per tax year, shared among associated members of a group of CCPCs, prorated for tax years shorter than 365 days.
bullethalf-year rule suspended for these properties
bulletno carry-forward of excess capacity for CCPCs with less than $1.5 million of eligible capital costs
bulleteligible property  would be capital property that is subject to the CCA rules, other than property included in CCA classes 1 to 6, 14.1, 17, 47, 49 and 51, which are generally long-lived assets.

See Immediate Expensing on the Budget 2021 website.

Capital Cost Allowance Classes and Rates

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:

T2 Corporation Income Tax Guide (T4012), T2 return - for information on CCA rates, search for the phrase "CCA rates and classes" in T4012.  To search any web page or pdf document, do ctrl-f to bring up the search box.

T4002 Self-employed Business, Professional, Commission, Farming and Fishing Income Guide 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.

Income Tax Folio S3-F4-C1, General Discussion of Capital Cost Allowance, including information on capital vs current expenditures.

Income Tax Folio S3-F8-C2, Tax Incentives for Clean Energy Equipment - includes information re accelerated CCA, enhanced CCA, and investment tax credits.

Current or Capital Expenses

Claiming Capital Cost Allowance

Classes of Depreciable Property

The Income Tax Regulations contain the classes and rates for capital cost allowance, at

    - Part XI Capital Cost Allowances

    - Schedule II and Schedule III to VI Capital Cost Allowance Rates  

The Income Tax Act and Regulations can be accessed from the Canada Department of Justice.

Capital Cost Allowance Half-Year Rule

Income Tax Regulations s. 1100(2) to (2.4)

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 of 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 $500 (less than $200 for purchases before May 3, 2006), 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
    - a certified feature film or certified production
    - class 12(o), which is computer software, but this does not include systems software, which is included in class 10

See paragraph 1.38 Half-year rule in the CRA Income Tax Folio S3-F4-C1, General Discussion of Capital Cost Allowance, for more detail on this topic.

Capital Cost Allowance  - Short Fiscal Year

Income Tax Regulations s. 1100(3) Taxation Years Less Than 12 Months

When the fiscal year is shorter than 365 days, generally the capital cost allowance must be prorated.  For instance, if the fiscal year is 200 days, first calculate the maximum CCA claim for a full year, then multiply by 200 and divide by 365.  This must be done for all property except classes of property that are excluded by Regulation 1100(3).  The property classes that are not prorated for a short fiscal year include:

    - Class 14 assets
    - Class 15 assets
    - timber limits and cutting rights
    - industrial mineral mines
    - certified productions
    - Canadian film or video productions, and
    - certain mining equipment in classes 28 and 41.

Zero-Emission Vehicles (ZEVs and ZEVPs)

Income Tax Act s. 13(7)(i), 248(1), Regulations Sch II, s. 1100(1)(a)(xl),(xli), 1100(2)A(e)(i),(f)(i), 1102(26), 7307(1.1)

Two new CCA classes were created by Budget 2019 for zero-emission vehicles acquired after March 18, 2019 and before 2028.    First-year enhanced CCA is available in the amount of:

 - 100% after March 18, 2019 and before 2024

 - 75% after 2023 and before 2026

 - 55% after 2025 and before 2028

Vehicles for which assistance is paid under the new federal purchase incentive announced in Budget 2019 will be ineligible for the first-year immediate expensing.

There is a $55,000 cost limit for class 55 (includes taxis and rental cars), which will be reviewed annually for appropriateness.

Class 54 (zero-emission passenger vehicle (ZEPV) which is not a taxi or rental car) has a capital cost limit of $30,000.

For further CRA information on this, see:

 - corporations: T4012 CCA Rates and Classes

 - self-employed: T4002 Class 54 (30%) and Class 55 (40%) - Zero-Emission Vehicles

 - employees: T4044 Employment Expenses Zero-Emission Vehicles

Retroactive Adjustment of Capital Cost Allowance Claims

A 2020 Tax Court case denied the appellant the ability to retroactively reduce capital cost allowance claims.  See:

December 2020 Life in the Tax Lane re retroactive CCA adjustments

St. Benedict Catholic Secondary School Trust v. The Queen 2020 TCC 109 - re attempt to retroactively reduce CCA in order to reduce non-capital losses carried forward. Resources


Non-Capital Losses

Terminal Loss

Property Rental

Employment Expenses

Tax Tips

bulletIf you are planning to buy an asset and yearend is approaching, buy it before yearend so that you will get the full CCA write-off sooner.  Note that the asset must be available for use in order to claim CCA.
bulletDon't create or increase a non-capital loss with CCA if it's likely that the losses will expire.

Revised: July 02, 2021


Copyright © 2002 Boat Harbour Investments Ltd. All Rights Reserved.  See Reproduction of information from

Facebook  | Twitter  |  See What’s New, stay connected with by RSS or Email
The information on this site is not intended to be a substitute for professional advice.  Each person's situation differs, and a professional advisor can assist you in using the information on this web site to your best advantage. 
Please see our legal disclaimer regarding the use of information on our site, and our Privacy Policy regarding information that may be collected from visitors to our site.