Capital Cost Allowance

How to Use

To access the CCA workcharts, press F9 when the cursor is positioned in one of the tables in Area A of the statement of real estate rentals or either on of the self-employment statements (T776, T1163, T1273, T2042, T2121 and T2125).

Setting Up and Deleting Classes

To set up or delete a CCA class when you are in one of the tables in Area A, proceed as follows:

• To set up a class: click Add in the corresponding section. A new line will appear; press F9 to access the Class workchart, and select the "Class" from the drop-down list. The class is now set up and is part of Area A.
• To delete a class, from the Class workchart:
  • click Delete on the toolbar;
  • select the class that you that you want to delete in Area A, and click Delete in the corresponding section.

Sorting of CCA classes

Two sort functions are available in the section for the CCA class calculation for each self-employment statement or summary of real estate rental properties. By clicking the first sort button, you will display the CCA classes in ascending order on screen and when printing. The second sort button will allow you to prioritize the depreciation of classes other than classes relating to buildings (1, 3 and 6). The sort will ensure that the program will calculate the CCA of all other classes, and if the net income is still positive, it will then depreciate the classes relating to buildings. When adding classes, you can simply sort the classes again. The sort will be retained when rolling forward the client file.

Entering Information

From one of the tables in Area A, you may enter all relevant information with respect to a class that you have just set up or to an already existing class. To do so, access the detailed statement of the class in one of the following ways:

• place your cursor on the desired class and double-click; or
• highlight the desired class and press Enter.

Once you have accessed the detailed statement, enter the required information on the appropriate lines. Where dealing with an acquisition or a disposition, follow the procedure below.

Acquisition of Property in the Year

To enter property acquired in the year (as long as the property has become available for use in the year), press F9 when the cursor is positioned on the "Additions (half-year)" or "Additions (normal rate)" line, as the case may be. Afterwards, double-click the highlighted line (or press Enter) to get to the entry screen of the property where you can enter the relevant information not forgetting the purchase date.

With this procedure, the adjusted cost base of the property will be carried over to the following year through the roll forward. As an alternative, you can also override the "Additions (half-year)" or the "Additions (normal rate)" line on the detailed statement of the class, as the case may be.

For self-employed statements, only the portion of each property used to earn income must be entered. For the statement of real estate rentals, you must complete the total cost of the percentage and the percentage of the personal share to determine the amount of the personal share and the rental share.

Only the portion of each depreciable asset used to earn income should be recorded.

Disposition of Property in the Year

To enter a disposition of property made in the year, press F9 when the cursor is positioned on the "Disposition" line.

At this point, if the property that has been disposed of has already been entered in the Summary, point your mouse to it and double-click. You will then access the entry screen regarding this property where you can enter the relevant information regarding the disposition (not forgetting the date).

However, if the property that has been disposed of has not been entered in the Summary, override the "Disposals" line in the detailed statement of the class and enter the lesser of the proceeds of disposition and capital cost of the property.

When you proceed with the disposition of property and this disposition is partial, you will have to indicate the proceeds of disposition and the related minimal cost to calculate the net proceeds of disposition.

CCA Classes

For CCA purposes, property belonging to a taxpayer and used to earn income is divided into different classes. A listing of the most common follows:

Class 1: Most buildings bought after 1987, including components such as wiring, plumbing, heating, and cooling systems.

Class 1.2: Buildings used for manufacturing or processing acquired after March 18, 2007, (including new buildings any portion of which is acquired by a taxpayer after March 18, 2007, where the building was under construction on March 19, 2007) that have neither been used, nor acquired for use before March 19, 2007. To be included in class 1.2, at least 90% of the building (measured by square footage) must be used for the designated purpose at the end of the taxation year. Buildings acquired before March 19, 2007, or whose total area used for the designated purpose at the end of the taxation year is less than 90% are included in class 1.

Class 1.3: Buildings used mainly for non-residential purposes acquired after March 18, 2007, (including new buildings any portion of which is acquired by a taxpayer on or after March 19, 2007, where the building was under construction on March 19, 2007) that have neither been used, nor acquired for use, before March 19, 2007. To be included in class 1.3, at least 90% of the building (measured by square footage) must be used for non-residential purposes at the end of the taxation year. Buildings acquired before March 19, 2007, or whose total area used for non-residential purposes at the end of the taxation year is less than 90% are included in class 1.

Class 3: Most buildings, including components, bought after 1978 and before 1988.

Class 6: Frame, log, stucco on frame, galvanized iron, or corrugated metal buildings that do not have any footings below the ground and which are used for the purpose of gaining or producing income from farming or fishing. Class 6 also includes fences and greenhouses.

Class 7: Canoes, rowboats, and most other vessels and their motors, furniture, and fittings.

Class 8: Property that is not included in any other class, such as fixtures, furniture, machinery, photocopiers, refrigeration equipment, telephones, tools costing $500 or more. Class 8 also includes outdoor advertising signs bought after 1987.

Class 8.1: Art work acquired after April 21, 2005 (drawing, print, engraving, gravure, sculpture, painting)

Class 9: Aircraft, including furniture or equipment attached to the aircraft, and spare parts.

Class 10: Automobiles, except those you use as a taxi or in a daily rental business, including vans, trucks, tractors, wagons, and trailers. General-purpose electronic data-processing equipment (commonly called computer hardware) and systems software acquired before March 23, 2004. See also class 45.

Class 10.1: passenger vehicles (i.e., vehicles acquired after June 17, 1987), whose cost exceeds:

• $20,000, for vehicles acquired between June 18, 1987 and August 31, 1989;
• $24,000, for vehicles acquired between September 1, 1989 and December 31, 1990;
• $24,000, before GST and PST, for vehicles acquired between January 1, 1991 and December 31, 1996;
• $25,000, before GST and PST, for vehicles acquired on or after January 1, 1997;
• $26,000, before GST and PST, for vehicles acquired on or after January 1, 1998;
• $27,000, before GST and PST, for vehicles acquired on or after January 1, 2000;
• $30,000, before GST and PST, for vehicles acquired on or after January 1, 2001.

Class 12: China, cutlery, kitchen utensils that cost under $200, linen, uniforms, dies, jigs, moulds, cutting or shaping parts of a machine, tools and medical or dental instruments that cost under $200, computer software (except systems software), and video cassettes bought after February 15, 1984, that you rent and do not expect to rent to any one person for more than 7 days in a 30-day period. The cost limit is increased to $500 from $200 for tools acquired after May 1, 2006. The cost limit for medical or dental instruments and kitchen utensils under Class 12 is increased to $500 from $200 for such utensils and instruments acquired after May 1, 2006. Tools eligible under this class specifically exclude electronic communication devices and electronic data processing equipment.

Class 13: Leasehold interests.

Class 14: Patents, franchises, concessions or licenses for a limited period (where the period is unlimited, the asset qualifies as eligible capital property).

Class 16: Taxis, vehicles used in a daily car-rental business, coin-operated video games or pinball machines acquired after February 15, 1984, and freight trucks acquired after December 6, 1991, that are rated higher than 11,788 kg.

Class 17: Roads, parking lots, sidewalks, airplane runways, storage areas, or similar surface construction.

Class 22: Most power-operated, moveable equipment bought before 1988 that is used for excavating, moving, placing or compacting earth, rock, concrete, or asphalt.

Class 38: Most power-operated, moveable equipment bought after 1987 that is used for excavating, moving, placing or compacting earth, rock, concrete, or asphalt.

Class 43: Property bought after February 25, 1992, that is used primarily in the manufacturing or processing of goods.

Class 43.1: Electrical generating equipment

Class 43.2: Energy production equipment acquired after February 22, 2005, and before 2020

Class 44: Property that is a patent, or a right to use patented information for a limited or unlimited period

Class 45: Computer equipment and systems software acquired after March 22, 2004. The current rule allowing a separate class election is not available for equipment that qualifies for the 45% rate. However, you may elect to have the current rule apply for equipment that is acquired before 2005.

Class 46: Data network infrastructure equipment acquired after March 22, 2004 (usually included in class 8).

Class 47: Property acquired after February 22, 2005, that is transmission or distribution equipment

Class 48: Property acquired after February 22, 2005, that is a combustion turbine

Class 49: Property acquired after February 22, 2005, that is a pipeline, used for the transmission of petroleum, natural gas or related hydrocarbons

Class 50: Computers and related computer equipment acquired after March 18, 2007.

Class 51: Natural gas distribution pipelines including control and monitoring devices, valves, metering and regulating equipment and other equipment ancillary to a distribution pipeline (but not buildings or other structures) acquired on or after March 19, 2007, that have neither been used, nor acquired for use, before March 19, 2007. Property acquired before March 19, 2007, is included in class 1.

Class 52: Computers and related equipment acquired after January 27, 2009, and before February 1, 2011. Half-year rule is not applicable

Special Rules

The program does not compute any CCA on assets depreciated on a straight-line basis. Therefore, enter the desired amount of CCA with respect to these classes on the "Override for CCA" line. You must enter an amount for Québec purposes even where this amount does not differ from the federal amount.

Both class 10.1 (Passenger vehicles) and class 13 (Leasehold interests) have a detailed workchart which is different from the usual detailed workchart of a class as a result of the application of special rules.

For instance, a separate class is prescribed for each automobile included in class 10.1. Moreover, upon disposition of such automobile, there can be no recapture or terminal loss, but an amount equivalent to half of the "normal" CCA for the year of disposition can be claimed if the automobile was included in class 10.1 at the end of the previous year.

Note that a separate class is also prescribed for each rental property costing $50,000 or more.

For Québec purposes only: you may use class 10/12 for property that is included in class 10 (with the half-year rule) for federal purposes and included in class 12 (without the half-year rule) for Québec purposes.

If Terminal Loss

If there are no more property in a class, but there is still a remaining UCC balance, enter "Y" (yes) to indicate a terminal loss. The terminal loss is automatically deducted from income.

Property qualified for accelerated depreciation

Accelerated investment incentive property

To qualify as accelerated investment incentive property, property must be acquired by a taxpayer after November 20, 2018, and become available for use before 2028. In addition, certain properties are excluded from the definition, in particular:

• property acquired on a rollover basis (section 85 ITA), or following an amalgamation (section 87 ITA) or the wind-up of a subsidiary (section 88 ITA);
• property previously owned or acquired by the taxpayer or by a person or partnership with which the taxpayer did not deal at arm’s length at any time when the property was owned or acquired by the person or partnership.

Qualified property acquired after November 20, 2018, will not be subject to the half-year rule, but will benefit from an increased CCA in the year of acquisition. The modified subsection 1100(2) ITR incorporates the existing half-year rule and provides for the new increased first-year allowance according to the CCA class:

• The general rule that applies for all CCA classes subject to subsection 1100(2) ITR (except classes 12, 13, 14, 15, 43.1, 43.2 and 53) allows for an increase in the UCC balance before CCA equal to 50% of the net additions (these is no addition for property acquired and available for use after 2023 and before 2028).
• Specific rules that apply to classes 43.1, 43.2 and 53, benefit from a 100% CCA of the cost of acquisition for property in these classes acquired after November 20, 2018, and before 2024. A phase-out of the increased CCA is defined for each CCA class for property available for use after 2023 and before 2028.
• The half-year rule, which always apply to property that do not meet the definition of “accelerated investment incentive property” from subsection 1104(4) ITR as well as property acquired and available for use before November 21, 2018, and after 2027.

In addition, specific rules are provided for CCA classes 13 and 14 in paragraph 1100(1)(b) and (c) ITR. Therefore, for accelerated investment incentive property, the CCA will be equal to 150% of the regular calculated CCA in the year of acquisition of the property.

For more information, consult the Canada Department of finances Web page, 2018 Fall Economic Statement: Investing in Middle Class Jobs.

Calculation of line Maximum allowable CCA in the Federal column

For CCA classes other than 10.1 and 13 or other than classes 24, 27, 29 and 34, the custom line Capital cost for accelerated investment incentive property included in the amount on lines 5 or 6 allows you to enter the capital cost of qualified property. This line is used to calculate the amount to add to line Balance for CCA, according to the CCA class selected, and as a result, takes into account the rules for subsection 1100(2) ITR when calculating the amount on the line Maximum allowable CCA.

For a CCA class 10.1, new measures will be taken into account in the calculation of the amounts on the lines Base amount for CCA and CCA when the acquisition date of the property is after November 20, 2018, and this date is part of the fiscal year end of the business.

For CCA class 13, the custom line Capital cost for accelerated investment incentive property included in the amount on line 3 allows you to enter the capital cost of qualified property. This line is used to calculate the amount added to the line Maximum allowable CCA taking into account clause 1100(1)(b)(i)(A) ITR.

If the additions and dispositions workchart (Jump Code: XXXX CCA FA) is used to enter the addition of a property and this property was acquired after November 20, 2018, the answer to the custom question Is the property an accelerated investment incentive property, as defined under subsection 1104(4) ITR? will be “Yes” and the new measures will be taken into account in the calculation of the amounts on the lines Balance for CCA and Maximum allowable CCA:

• for CCA classes other than 10.1 and 13, when an amount is entered on the new custom line Capital cost for accelerated investment incentive property included in the amount on lines 5 or 6;
• for a CCA class 10.1, when the acquisition date of the property is after November 20, 2018, and this date is part of the fiscal year end of the business; and
• for CCA class 13, when an amount is entered on the new custom line Capital cost for accelerated investment incentive property included in the amount on line 3.

These calculations also apply to amounts in the Québec column, except for property in CCA classes 14, 14.1, 44 and 50, acquired after December 3, 2018, that are properties qualified for the accelerated depreciation special rules in Québec.

Property qualified for accelerated depreciation special rules in Québec

In the Information Bulletin 2018-9, published on December 3, 2018, the Government of Québec announced the harmonization with the measures for the accelerated investment incentive property announced by the federal Government. In addition, it announced the increase to 100% of the depreciation for a property, acquired and available for use after December 3, 2018, that is qualified intellectual property or general-purpose electronic data processing equipment. For qualified property acquired and available for use in the taxation year, the CCA is equal to the capital cost of the acquired property.

A qualified intellectual property means property part of CCA class 14, 14,1 or 44, acquired after December 3, 2018, that is a patent or a right to use patented information, a licence, a permit, know-how, a commercial secret or other similar property constituting knowledge. The property must be acquired by the business in the course of a technology transfer or be developed by or on behalf of the business with a view to enabling the implementation of an innovation or invention with regards to its business. The expression “technology transfer” refers to the transmission, to a business, of knowledge in the form of know-how, techniques, processes or formulas. The process of implementing an innovation or invention as well as the implementation efforts of that innovation or invention must be made only in Québec.

General-purpose electronic data processing equipment and systems software for that equipment means property included in CCA class 50, acquired and available for use after December 3, 2018, that is used primarily in Québec in the course of carrying on a business.

Calculation of line Maximum allowable CCA in the Québec column

For CCA classes 14, 14.1, 44 and 50, the custom line Capital cost of property qualified for the accelerated depreciation special rules in Québec included in the amount on lines 5 or 6 allows you to enter the capital cost of qualified property. This line is used to calculate the amount to add to the line Balance for CCA, according to the CCA class selected, and as a result, taking into account the rules for the calculation of the amount on the line Maximum allowable CCA.

For CCA class 50, if the additions and dispositions workchart (Jump Code: XXXX CCA FA) is used to enter the acquisition of a property and this property was acquired after December 3, 2018, the answer to the custom question Is the property a property that qualifies for the accelerated depreciation special rules in Québec? will be “Yes,” the cost of acquisition of this property will be updated to the new line Capital cost for property qualified for the accelerated depreciation special rules in Québec included in the amount on lines 5 or 6 and the amount calculated on the line Balance for CCA will take the new measures into account.

For CCA classes 14, 14.1 and 44, if the additions and dispositions workchart (Jump Code: XXXX CCA FA) is used to enter the acquisition of a property that is qualified intellectual property and this property was acquired after December 3, 2018, the answer to the custom question Is the property a property that qualifies for the accelerated depreciation special rules in Québec? will be “Yes,” the cost of acquisition of this property will be updated to the line Capital cost for property qualified for the accelerated depreciation special rules in Québec included in the amount on lines 5 or 6 and the amount calculated on the line Balance for CCA will take the new measures into account.

Additional Capital Cost Allowance for Québec (CCA classes 50 and 53)

This section of the form is used to calculate the additional CCA amounts for qualified property in CCA classes 50 and 53. It includes two subsections:

• “Additional CCA of 35%,” for qualified property that was acquired and became available for use after March 28, 2017, and before March 28, 2018; and
• “Additional CCA of 60%,” for property that was acquired and became available for use after March 27, 2018, and before December 4, 2018.

Calculation of the amounts on lines “Half of the capital cost of qualified property that was acquired and became available for use in the current taxation year” and “Capital cost of qualified property that was acquired and became available for use in the current taxation year”

The amounts entered on these lines are calculated in the following situations:

• When information relating to qualified property is entered on copies of the additions and dispositions workchart (Jump Code: XXXX CCA FA) of an eligible class:

  • if the acquisition date is after March 28, 2017, and before March 28, 2018, and is part of the business’s fiscal year end, the amount on the line Half of the capital cost of qualified property that was acquired and became available for use in the current taxation year of subsection “Additional CCA of 35%,” will be equal to the total of 50% of the amounts entered on the line Adjusted capital cost in each copy of the additions and dispositions workchart. The same calculation, if the acquisition date is after March 27, 2018, and before November 21, 2018, and is part of the business’s fiscal year end, will be performed on the line Half of the capital cost of qualified property that was acquired and became available for use in the current taxation year in part “Qualified property that was acquired and became available for use after March 27, 2018, and before November 21, 2018” of subsection “Additional CCA of 60%.” However, if the acquisition date is after November 20, 2018, and before December 4, 2018, the amount on the line Capital cost of qualified property that was acquired and became available for use in the current taxation year in part “Qualified property that was acquired and became available for use after November 20, 2018, and before December 4, 2018” of subsection “Additional CCA of 60%” will be equal to the total of the amounts entered on the line Adjusted capital cost in each copy of the additions and dispositions workchart. If the acquisition date is after December 3, 2018, but before July 1, 2019, a diagnostic will prompt you to enter the total of the lines Adjusted capital cost for property that meets the conditions stated in the Information Bulletin 2018-10 on the line Capital cost of qualified property that was acquired in the current taxation year after December 3, 2018, but before July 1, 2019;

• When the amount on line Additions (1/2 year) is not calculated (because the property included in the class is not entered on copies of the additions and dispositions workchart) and an amount is manually entered on that line:

  • o the amount on the line Half of the capital cost of qualified property that was acquired and became available for use in the current taxation year in subsection “Additional CCA of 35%” will be calculated and will equal 50% of the amount entered on line Additions (1/2 year) and a diagnostic will prompt you to enter an amount representing half of the capital cost corresponding to property that was acquired and became available for use after March 27, 2018, and before November 21, 2018, on the line Half of the capital cost of qualified property that was acquired and became available for use in the current taxation year in part “Qualified property that was acquired and became available for use after March 27, 2018, and before November 21, 2018” of subsection “Additional CCA of 60% (the amount entered will then be automatically deducted from the amount in subsection “Additional CCA of 35%”)

In all aforementioned cases, the answer to the question Does this class include property eligible for the additional capital cost allowance for Québec? is “Yes.” In all other cases, you will have to answer “Yes” to this question and enter an amount on each line Half of the capital cost of qualified property that was acquired and became available for use in the current taxation year or Capital cost of qualified property that was acquired and became available for use in the current taxation year based on the business’s situation because the program cannot determine the acquisition date or the relevant capital cost for property eligible for the additional CCA for Québec.

Calculation of the lines “UCC of qualified property that was acquired and became available for use in the preceding taxation year”

The amounts entered on these lines are calculated when rolling forward a client file in which an amount is entered on the line Half of the capital cost of qualified property that was acquired and became available for use in the current taxation year and for qualified property that was acquired and became available for use after March 27, 2018, and before November 21, 2018, or the line Capital cost of qualified property that was acquired and became available for use in the current taxation year for qualified property that was acquired and became available for use after November 20, 2018, and before December 4, 2018. The amount will be calculated according to the data entered on the lines Half of the capital cost of qualified property that was acquired and became available for use in the current taxation year or Capital cost of qualified property that was acquired and became available for use in the current taxation year, in proportion to the CCA claimed and the UCC in the class before CCA.

Additional CCA of 30% in Québec

In the Information Bulletin 2018-9 published on December 3, 2018, the Ministère des Finances du Québec announced that an additional capital cost allowance of 30% would be added for targeted property. The CCA amount corresponds to 30% of the amount deducted, for the previous fiscal year end, relating to the CCA with respect to targeted property. In addition, the Information Bulletin indicates that a separate class must be created for property of a same class that gives rise to the additional CCA.

Targeted property

Targeted property must be acquired after December 3, 2018. It can be property that is new at the time of its acquisition by the business and not property acquired from a person or partnership with which the business is not dealing at arm’s length. It must start being used within a reasonable period of time after being acquired and for at least 730 consecutive days. In addition, it must be used primarily in Québec and must not be property with regards to which the business was entitled to or could have been entitled to claim the additional capital cost allowance of 60%. The property must be:

• equipment used in manufacturing or processing (class 53) or, if acquired after 2025, property included in class 43, but that would have been included in class 53 had it been acquired in 2025;
• clean energy generation equipment (class 43.1 or 43.2); or
• general-purpose electronic data processing equipment and related operating system software (class 50).

In addition, a targeted property can be a qualified intellectual property (certain property in classes 14, 14.1 and 44).

The program considers that property included in classes 14, 14.1, 43.1, 43.2, 44, 50 and 53 acquired after December 3, 2018, is targeted property. If this is not the case, modify the answer to the question Is the property a property that qualifies for the additional CCA of 30% in Québec? in the appropriate additions and dispositions workchart (Jump Code: XXXX CCA FA). If you are not using the additions and dispositions workchart, make the required adjustments in the CCA CLASS form of the corresponding business. For more details on eligible properties, consult the Information Bulletin 2018-9 published by the Ministère des Finances du Québec.

Steps to follow in order for the program to correctly calculate the CCA and the additional CCA in respect of targeted property

The question Is this a separate class used solely for the Québec income tax return and relating to prescribed property qualifying for the additional CCA of 30%?, located under the “CCA Deduction of 30%” section, allows you to indicate if the class is a separate class for purposes of Québec calculations. The question Are properties entered in the Québec column eligible for the additional CCA of 30%? located under the question Is this a separate class used solely for the Québec income tax return and relating to prescribed property qualifying for the additional CCA of 30%? allows you to indicate if the CCA calculated for this class must be used the following year to calculate the additional CCA. Follow the instructions below in order for the program to correctly perform the calculations based on the situation of the business:

Situation number 1: All properties in the class are non-targeted properties

If the additions and dispositions workchart is used: No separate class is required, and the business is not entitled to the additional CCA. Create only one class and make sure that the answer to the question Is the property a property that qualifies for the additional CCA of 30% in Québec? determined by the program is “No” for all copies of the additions and dispositions workchart of the class. Make sure that the answer to the questions Is this a separate class used solely for the Québec income tax return and relating to prescribed property qualifying for the additional CCA of 30%? and Are properties entered in the Québec column eligible for the additional CCA of 30%? in the CCA CLASS form of the corresponding business is “No.”

If the additions and dispositions workchart is not used: No separate class is required, and the business is not entitled to the additional CCA. Create only one class and make sure that the answer to the questions Is this a separate class used solely for the Québec income tax return and relating to prescribed property qualifying for the additional CCA of 30%? and Are properties entered in the Québec column eligible for the additional CCA of 30%? in the CCA CLASS form of the corresponding business is “No.”

Situation number 2: All properties in the class are targeted properties

If the additions and dispositions workchart is used: No separate class is required, and the business is entitled to the additional CCA for targeted property. Create only one class and make sure that the answer to the question Is the property a property that qualifies for the additional CCA of 30% in Québec? determined by the program is “Yes” for all copies of the additions and dispositions workchart of the class. Therefore, the answer to the question Are properties entered in the Québec column eligible for the additional CCA of 30%? in the CCA CLASS form of the corresponding business will be “Yes.” Make sure that the answer to the question Is this a separate class used solely for the Québec income tax return and relating to prescribed property qualifying for the additional CCA of 30%? in the CCA CLASS form of the corresponding business is “No.” The program will use the CCA amount claimed of the Québec column to calculate the additional CCA when rolling forward the client file.

If the additions and dispositions workchart is not used: No separate class is required, and the business is entitled to the additional CCA for targeted property. Create only one class and make sure that the answer to the question Are properties entered in the Québec column eligible for the additional CCA of 30%? of the CCA CLASS form of the corresponding business is “Yes.” Make sure that the answer to the question Is this a separate class used solely for the Québec income tax return and relating to prescribed property qualifying for the additional CCA of 30%? in the CCA CLASS form of the corresponding business is “No.” The program will use the CCA amount claimed of the Québec column to calculate the additional CCA when rolling forward the client file.

Situation number 3: The class contains targeted and non-targeted property

If the additions and dispositions workchart is used: A separate class for purposes of the Québec calculations is required for targeted property, and the business is entitled to the additional CCA for targeted property. In a class, enter all properties in the additions and dispositions workchart and make sure that the answer to the question Is the property a property that qualifies for the additional CCA of 30% in Québec? determined by the program is the correct one based on whether the property is targeted or not. Make sure that the answer to the questions Is this a separate class used solely for the Québec income tax return and relating to prescribed property qualifying for the additional CCA of 30%? and Are properties entered in the Québec column eligible for the additional CCA of 30%? in the CCA CLASS form of the corresponding business is “No.” In that situation, all amounts for properties entered in the additions and dispositions workchart will be transferred to the Federal column of the CCA CLASS form of the corresponding business. Only the amounts for non-targeted property will be transferred to the Québec column. Then, create a new class, answer “Yes” to the question Is this a separate class used solely for the income tax return and relating to prescribed property qualifying for the additional CCA of 30%? in the CCA CLASS form of the corresponding business and enter only targeted property in the additions and dispositions workchart. Make sure that the answer to the question Is the property a property that qualifies for the additional CCA of 30% in Québec? determined by the program is “Yes” for all copies of the additions and dispositions workchart of this class. Make sure that the answer to the question Are properties entered in the Québec column eligible for the additional CCA of 30%? of the CCA CLASS form of the corresponding business is “Yes.” The amounts in the Federal column of the CCA CLASS form of the corresponding business will not be calculated for this copy of the class, and no amount should be entered in these columns. Only the amounts in respect of targeted property must be entered in the Québec column. The program will use the CCA amount claimed of the Québec column to calculate the additional CCA when rolling forward the client file.

If the additions and dispositions workchart is not used: A separate class for purposes of Québec calculations is required for targeted property, and the business is entitled to the additional CCA for targeted property. In a class, enter the amounts relating to targeted and non-targeted property in the Federal column of the CCA CLASS form of the corresponding business. Make sure that the answer to the questions Is this a separate class used solely for the Québec income tax return and relating to prescribed property qualifying for the additional CCA of 30%? and Are properties entered in the Québec column eligible for the additional CCA of 30%? in the CCA CLASS form of the corresponding business is “No.” In the Québec column of the CCA CLASS form of the corresponding business, enter only the amounts relating to non-targeted property, using an override. Then, create a new class, answer “Yes” to the questions Is this a separate class used solely for the Québec income tax return and relating to prescribed property qualifying for the additional CCA of 30%? and Are properties entered in the Québec column eligible for the additional CCA of 30%? in the CCA CLASS form of the corresponding business and enter only the amounts relating to targeted property in the Québec column. The amounts in the Federal column of the CCA CLASS form of the corresponding business will not be calculated for this copy of the class, and no amount should be entered in this column. The program will use the CCA amount claimed of the Québec column to calculate the additional CCA when rolling forward the client file.

Maximum allowable CCA (Form T776)

The CCA amount on the line Maximum allowable CCA will be limited so that it cannot be used to create or increase a rental loss. As a result, the CCA is applied in the order in which the classes have been entered, while taking into account the election to not calculate the CCA for all classes or buildings in Area A of Form T776. Therefore, the program first applies the CCA to the first class. If there remains income, the CCA is first applied to the second class and so on. To claim a different amount of CCA, enter the desired CCA amount on the line CCA claimed, using an override. Accordingly, the calculation on the line Maximum allowable CCA will be modified and will represent the CCA amount available for the next class(es).