Example: How to calculate the tax deductible depreciation on a new van
Let’s work through a CCA calculation example. Say you bought a Chevrolet Express Cargo van for your business for $40,000. According to the CRA’s definitions of types of vehicles, you’ve determined your van is a motor vehicle, which puts it under Class 10 – meaning you can deduct a rate of 30% CCA of your van’s capital cost. Since the capital cost in this case is equal to the purchase cost, the CCA can be calculated by multiplying $40,000 by 30%, giving you a deductible CCA amount of $12,000.
Keep in mind that this is just a simplified example of how to calculate your vehicle’s capital cost allowance. You usually won’t be able to deduct the full amount within the first year you purchase an asset. Because it can get more complicated depending on individual scenarios, we recommend you talk to either a tax accountant or a tax lawyer to know exactly what you’re eligible for and how to claim it.