You cannot deduct the cost of a property such as a vehicle or musical instrument that you use to earn your income. However, you can deduct a percentage of the property's cost. The portion of the cost you can deduct or claim is called depreciation or, for income tax purposes, capital cost allowance(CCA).
If you are an employee earning commission income, you can claim CCA on your vehicle if you meet the conditions outlined in the section called "Employment conditions" in the topic Employees earning Commission income.
If you are an employee earning a salary, you can claim CCA on your vehicle if you meet the conditions outlined in the section called "Employees earning a salary" in Allowable motor vehicle expenses.
If you are an employed musician, you can claim CCA on a musical instrument if you had to provide the musical instrument as a term of employment.
You do not have to claim the maximum amount of CCA in any given year. You can claim any amount you wish, from zero up to the maximum allowed for the year.
Use the back of Form T777, Statement of Employment Expenses, to calculate your CCA claim.
Interpretation Bulletin IT-522, Vehicle, Travel and Sales Expenses of Employees, has more details about CCA.
Class 10 - The maximum CCA rate for this class is 30%.
Your passenger vehicle can belong to either Class 10 or Class 10.1. You only include a passenger vehicle in Class 10.1 if it meets certain conditions. We explain these conditions below.
Class 10.1 - The maximum CCA rate for this class is 30%. The maximum capital cost of each vehicle that may be included in Class 10.1 is $30,000 plus GST and provincial sales tax (PST), or HST.
Include your passenger vehicle in class 10.1 if it meets the conditions outlined in Capital Cost Allowance on passenger vehicles.
If you acquired your vehicle before January 1, 2001, and it cost more than $27,000, get the CRA guide T4044, Employment Expenses adn see the section on Capital Cost Allowance.
To determine what class your passenger vehicle belongs to, do not include the GST and PST, or HST, when calculating the cost of the vehicle.
To determine what class your passenger vehicle belongs to, do not include the GST, and PST, or HST, when calculating the cost of the vehicle. This applies to all passenger vehicles acquired after December 31, 1990.
Because of the differences between Class 10 and Class 10.1, there are two separate parts (Part A and Part B) on the capital cost allowance schedule on page 2 of Form T777.
Use Part A to calculate CCA for both Class 8 and Class 10 property, since the rules for these two classes are similar.
Use Part B to calculate CCA on Class 10.1 property only. List each vehicle that belongs in Class 10.1 on a separate line. Calculate CCA separately for each vehicle listed.