Can You Claim Capital Cost Allowance on Your Car?

Can I claim Capital Cost Allowance on my car? This was a question asked of one of our team earlier this week. It isn’t the first time someone has asked us this so that makes it ideal for a blog post.

 

The fast answer is, yes you can claim Capital Cost Allowance (CCA) if you use your vehicle for work.

 

What is Capital Cost Allowance?

Capital Cost Allowance is a tax deduction you can make for a depreciating asset that is required for work. That means a work truck, works van, taxi, car you use for Uber or whatever.

 

The key here is depreciating asset. An asset that loses value over time or through use. As we all know, vehicles lose value for both these reasons.

 

As long as the vehicle is used for work and you can prove it, you should be able to claim CCA.

 

How Much Capital Cost Allowance Can You Claim?

The exact amount depends on the vehicle, the business and the time of year.

 

Vehicles classed as CCA Class 10 should cost no more than $30,000 less taxes. Vehicles costing more are CCA Class 10.1.

 

Trucks, pickups and vans need to be used between 50% and 90% for business with some personal use allowed.

 

The exact amounts and instructions on how to claim can be found here.

 

How Can I Claim Capital Cost Allowance?

The link above takes you to the forms necessary to claim CCA. You could also have your accountant do it if you have one.

 

Sole proprietors and members of partnerships are able to claim CCA on line 9936 of Form T2125, Statement of Business or Professional Activities. Corporations can also claim CCA in their T2 Corporate income tax return.

 

It’s more paperwork but you could save some money on your tax bill!

 

Who is eligible for CCA?

 

Contractors, self-employed and some employees are eligible for CCA. There are a few criteria you need to fulfil though:

 

• You must have paid for your own car for work and your contract of employment has this as a requirement.
• You are required to work at locations other than your employer’s place of business.
• You are not claiming a non-taxable travelling allowance.
• You have a copy of Form T2200, Declaration of Conditions of Employment, signed by your employer.

 

The above is just a guide. Visit the Government’s CCA web page for specific details.

 

Claiming a Capital Cost Allowance could help lower your tax bill and give you a little more money to pay off a car loan early or save for a rainy day. While it is more administration for you to take care of, that money is better off in your pocket than the tax man’s!

 

Thanks for Reading!