How do I calculate CCA on a vehicle I use partly for business?
For a passenger vehicle used partly for business, the Capital Cost Allowance (CCA) calculation involves two steps: first, apply the half-year rule and CCA rate to determine the maximum annual CCA; second, reduce that amount by the personal-use percentage (i.e., multiply by your business-use fraction based on your mileage log).
You also need to confirm that your vehicle's original cost does not exceed the federal prescribed limit for passenger vehicles. If you paid more than that cap, only the capped amount forms the cost base for CCA purposes. The applicable CCA class for most passenger vehicles is Class 10 or 10.1, depending on the purchase price, and the declining-balance rate is 30%.
All of this means your annual CCA deduction depends on the vehicle's cost (subject to the cap), how many years you have owned it, its current undepreciated capital cost, and your business-use percentage for the year. Because business-use percentage can vary annually, so can your CCA claim. Form T2125 includes a dedicated area for vehicle CCA calculations to help you work through these steps.
Key takeaways
- Apply the CCA rate to the vehicle's eligible cost base, then multiply by the business-use percentage.
- The half-year rule reduces the first-year deduction by half.
- A federal cap limits the cost base for expensive passenger vehicles.
- Your mileage log's business-use percentage directly affects the annual CCA amount you can claim.