Generally, assets of the same type are pooled in one Capital Cost Allowance (CCA) class. For example, equipment would generally be included in one Class 8 pool.
Regulation 1101 of the Income Tax Act sets out the cases where separate classes are prescribed or allowed. There are many provisions in this Regulation, so this list is not meant to be exhaustive.
Where more than one type of property is included in one class, and one property is used to earn business income and the other is used to earn property income, then separate classes are required. An example is the case where a company owns two warehouses, where one is used in a storage business and the other is rented to a third party. Each warehouse would be in a separate class.
Separate classes of assets would be required where a business carries on a life insurance business and an insurance business other than a life insurance business.
Depreciable assets owned by a taxpayer would be in a separate class from assets held in a partnership by the taxpayer who has a partnership interest.
Generally, rental properties with a capital cost of $50,000 or greater are required to be held in separate classes.
Automobiles costing in excess of $30,000 before applicable sales taxes are required to be added to Class 10.1 and the amount to be added to the Class is restricted to $30,000 plus applicable sales taxes. Due to this restriction, each 10.1 automobile is required to be held in a separate class.
Assets that represent Rapidly Depreciating Electronic Equipment can be placed in a separate class if they would be included in Class 8 and they have a capital cost of at least $1,000. These assets must be of the following types: computer software, a photocopier, or office equipment that is electronic communications equipment, such as a fax machine or telephone equipment.
As the classification of assets is subject to many exclusions and limitations, taxpayers would be advised to review the Regulations in detail or to consult their tax advisor.
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