When you purchase certain items for your business, the Canada Revenue Agency (CRA) will not allow you to deduct the entire value of the item for the year of purchase. Instead, the CRA allows you to write off a portion of the item’s depreciable value over a period of several years by claiming Capital Cost Allowance (CCA).
The CRA includes general-purpose electronic data processing equipment (commonly called computer hardware) and systems software for that equipment, including ancillary data processing equipment in Class 10 with a CCA rate of 30%, if you acquired them either:
- before March 23, 2004
- after March 22, 2004, and before 2005, and you made an election.
Computer hardware and systems software are in Class 45, with a CCA rate of 45% if you bought them after March 22, 2004, and before March 19, 2007.
If your computer hardware and systems software were bought after January 27, 2009, and before February 2011, it may qualify for Class 52 with a 100% CCA rate with no half-year-rule. Certain conditions have to be met. For instance, the asset must not have been or be used principally as electronic process control or monitor equipment and must be situated in Canada.
Otherwise, your computer hardware and systems software belong in Class 50, with a CCA rate of 55%.
To learn more about Capital Cost Allowance (CCA) classes that property falls into, go to: Classes of depreciable property - Canada.ca
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