Capital Cost Allowance

 

 

IT Regulations 1100

See also Part XI

Schedule II Classes 1-52

Schedule III Class 13

Schedule IV Class 15

Schedule V Industry Mineral Mines

Schedule VI Timber Limits and Cutting Rights

Schedule II Capital Cost Allowance Classes
CCA Topics
Website - capital vs current?

Initial development costs that result in creation of an asset should be capitalized to Class 12

but could be Class 46 if very large client, like a bank with their own network infrastrcture equipment and systems software.

Cost of maintaining a website is generally a current expense.

Refer to IT 128R CCA -Depreciable property

(look for enduring benefit  and discussion on capital vs current )

Websites are typically updated and changed on an ongoing basis.

CRA Document No's that might be helpful - but you'll require a subscription to CCH or Carswell to get them..

Web page development costs may be capital expenses depending on the web page's expected useful life

CRA Document No 2010-0380521E5

Current expenses or capital expenditure? Property

Property rules apply equally to self-employment as a self-employed person owns property used in the business active manner by the business or in a rental (passive use)

Here's what another accountant said:

"To the best of my knowledge, there is nothing in the CICA Handbooks that dictates or even suggests an appropriate capitalization policy or a depreciation policy. These have historically been matters for professional judgement and would normally take into account concepts like materiality and the size of the company.

In fact, arguably, the concept of a capitalization threshhold goes against all the rules in the CICA handbook and is done as an administrative convenience only by accountants where the amounts are not considered to be material. It has been a few years since I looked at the handbook on these issues and it is possible that it may have changed since I last looked at it, but I just took a quick look and didn't find anything.

As a bookkeeper, I would normally talk to the company's accountant and run these issues by him or her so that we are both on the same page.

With respect to depreciation policy, if the company is small and the amounts not material, some accountants will just follow the tax treatment if there is an argument to to made that the difference would not be material.

Hope this helps."
Gordon Holley, CA, CFP, CPB
BeanKeepers (Canada) Bookkeeping Franchise Company

Self-employed: Classes of depreciable property

 They don't make it easy for you, but CCH Preparing your Income Taxes 886t.12 says that printers under $10,000 and printers under $100,000 fall into Class 45/50/52 and large printers costing over $100,000 are Class 8 rather than Class 45.

If you've put something in the wrong class, it's possible to re-classify the asset.  There's a process for re-classification found in CCH 871 where there are several pages of technical examples. See ITA 13(5),(6) 52; IT190R2. 

IT472: Class 8
Class 10 and Class 10.1
Class 52 100% (Computers)

Changes to IT Regulations can be passed by Order-in-Council and posted in the Gazette, rather than passed by Parliament. It’s easier to change a regulation than it is to change the Income Tax Act.

Find the CCA changes proposed in the 2009 budget posted in the Canada Gazette:

Original regulations Capital Cost Allowance – 2009 Budget Measure

Regulations amending original Capital Cost Allowance – 2009 Budget Measure

CCA and Deemed Dispositions
Non-arm's length acquisition - Calculation of Cost
Self-Employed: Common CCA Classes
Electronic office equipment and data network

Class 8 20%

  • Photocopiers, telephones,
  • Cost minimum increased from $200 to $500 May 1, 2006

Class 10 30%

  • General Purpose electronic data-processing equipment and systems software acquired before March 23, 2004

Class 12 100%

  • Cost limit increased from $200 to $500 May 1, 2006
  • Includes computer software (not systems software)
  • The half year rule applies to some Class 12 items and not others

Class 45 45%

  • Computer equipment and software systems acquired after March 22, 2004

Class 46 30%

  • Data network infrastructure and systems software for equipment acquired after March 22, 2004 (usually Class 8)

Class 50 55%

  • General purpose computer equipment and systems software acquired after March 18, 2007 not used principally as electronic process control, communications control or monitor equipment and systems software related to such equipment and data handling equipment not ancillary to general purpose computer equipment

Class 52 100%

  • Jan 27, 2009 to Feb 1, 2011
  • Computer Equipment & Systems Software - 100%
  • Half year rule will not apply 
  • Must not be a change in use or reverts to Class 50 above 
  • iPhones qualify
T4037 Capital Gains
Depreciable property dispositions
Buildings:Restricted terminal loss/no capital loss
IT 478 Recapture & Terminal Loss
T1 Schedule 3
IT 285 Capital Cost Allowance - General Comments

Other Interpretation Bulletins

27. Refer to the current version of the following bulletins (listed alphabetically by subject) for information on CCA claims regarding particular types of property:

Building

IT-79

Certified Feature Productions and Certified Short Productions

IT-441

Class 8 property

IT-472

"Construction" - Meaning of

IT-411

Condominiums

IT-304

Contractor's moveable equipment

IT-306

Disposition of depreciable property

IT-220

Earth-moving equipment

IT-469

Elections under Regulation 1103

IT-327

Emphyteutic lease

IT-324

Gas and oil exploration and production equipment

IT-476

Industrial mineral mines

IT-492

Leasehold interests

IT-464

Leasing property

IT-443

Logging assets

IT-501

Manufacturing and processing machinery and equipment

IT-147

Multi-unit residential buildings

IT-367

Partial disposition of property

IT-418

Patents, franchises, concessions and licences

IT-477

Pipelines

IT-482

Pollution control property

IT-336

Radio and television equipment

IT-317

Recapture and terminal loss

IT-478

Rental properties - $50,000 or more

IT-274

Rental properties - restrictions

IT-195

Taxation year of individuals

IT-172

Transferred and misclassified property

IT-190

Vessels

IT-267

Video tapes, films, computer software and master recording tapes

IT-283

 

28. In certain circumstances, the capital cost of depreciable property may be determined or altered by special provisions in the Act. The following list indicates some of these provisions and the interpretation bulletins currently issued that provide details of their application:

The Act

Description of provision discussed in bulletin

Bulletin

13(5),(6)

Transferred property or misclassified property

IT-190

13(7)

Passenger vehicle cost in excess of $20,000

IT-521

13(7.1)

Receipt of inducements or other forms of assistance

IT-273

13(12)

Expenses of representation

IT-99

13(21)(b)

Capital cost allowance - depreciable property

IT-128

13(21)(c)

Conversion of property to and from inventory

IT-102

20(1)(a), (aa)

Cost of clearing or levelling land

IT-485

20(1)(a), 21(1)

Election to capitalize cost of borrowed money

IT-121

44

Replacement property, expropriation of property

IT-259

69(1)

Property acquired in "non-arm's length" transaction

IT-169

69(1)

Property acquired as a gift or from inheritance

IT-209

73

Transfer of property to a spouse

IT-258

80

Debtors gain on settlement of debt

IT-293

85

Transfer of property to a corporation

IT-291

98(3)

Distribution of property on cessation of partnership

IT-471

107(2)

Property distributed by trust to a capital beneficiary

IT-209

127(5)

Investment tax credit

IT-331




 

 

 

 
 
 
 
 
 
 
Copyright 2003-2018  Eileen Reppenhagen   Site Accessibility    Privacy policy    More legal stuff    Contact

Disclaimer: This website does not research or endorse any product or service appearing in links or advertisements anywhere on this site. 

I consider requests to update a particular page if there's an error or new information worth adding.

CRA has updated their website. If the link has a note that it's been archived, it's likely in their new Folio's or will be in the Folio's in the future.

If someone were to make an offer to purchase the rights to TaxDetective (Trademarked in Canada), I'm open to offers. 

Please do NOT rely on or use the information on this website as a basis for a course of action without obtaining appropriate professional advice, in writing. 

All Intuit®, QuickBooks® Software,Quicken® Software and Profile® Software trademarks remain the property of their respective holders, and are used only to describe the products discussed on this website.

Any usage of the above-mentioned marks anywhere in this website in no way indicates any relationship, endorsement, or affiliation with the holders of said trademarks other than specifically stated, for example, Certified QuickBooks ProAdvisor.