Before the new accelerated CCA was introduced, most capital additions were only allowed to claim one-half of net additions to the CCA class in the year. For example, if you purchased a vehicle for $25,000 in Class 10, you would only be able to claim half of the addition at a 30% CCA rate in the first year which equals a $3,750 tax deduction.

You can now claim enhanced CCA for the purchase of most depreciable assets purchased and available for use from November 21, 2018, to December 31, 2027. Enhanced CCA means that the previous half-year claim of CCA will now be tripled. In the previous example, you would now be able to claim up to $11,250 as a tax deduction for the same Class 10 vehicle purchased on or after November 21, 2018.

For purchases in calendar years from 2024 to 2027, there are different rules which result in a lower tax deduction. Furthermore, manufacturing and processing equipment acquired and available for use from November 21, 2018, to December 31, 2023, will be eligible for a full tax deduction meaning 100%. However, the asset must be used by the taxpayer in Canada primarily for the manufacturing or processing of goods for sale or lease. If the equipment is acquired and available for use from 2024 to 2027, there are different rules which result in lower tax deductions and not the 100% mentioned above.

Please note that accelerated CCA will not be available on capital assets acquired from non-arms length persons including related parties or assets transferred to the taxpayer on a rollover basis.