Capital property — anything with lasting value like a laptop, furniture, or a vehicle — can't be expensed outright. You deduct it over years through capital cost allowance, calculated in Area A at the back of Form T2125, with the total landing on line 9936. Part of the complete T2125 line-by-line reference.
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The classes freelancers actually use
Every depreciable property belongs to a CRA class with a prescribed rate (declining balance — you apply the rate to what's left, not the original cost):
- Class 50 — 55%: computers and systems software (acquired after March 18, 2007). Better still: under proposed changes, Class 50 additions acquired after April 15, 2024 and available for use before 2027 qualify for an enhanced first-year deduction of 100% — the whole laptop, written off in year one.
- Class 12 — 100%: application software (non-systems) and tools under $500. Software normally faces the half-year rule, but recent purchases escape it (see below); small tools don't face it at all.
- Class 8 — 20%: the catch-all — furniture, appliances, tools costing $500 or more, photocopiers, fax and phone equipment, and equipment not in another class.
- Class 10 — 30%: motor vehicles and most passenger vehicles.
- Class 10.1 — 30%: a passenger vehicle bought in 2025 that cost more than $38,000 before tax. Your CCA base is capped at $38,000 plus sales taxes no matter what you paid, and each 10.1 vehicle gets its own class.
- Class 54 — 30%: zero-emission vehicles, capital cost capped at $61,000 plus sales taxes. The 100% first-year write-off was reinstated for ZEVs acquired and available for use on or after January 1, 2025 (under proposed changes; phases down after 2029).
First year: the half-year rule — and why it often doesn't apply now
The default is the half-year rule: in the year you buy something, you claim CCA on only half of your net additions. A $1,000 Class 8 desk would give you 20% × $500 = $100 in year one.
But the half-year rule does not apply to accelerated investment incentive property (AIIP — generally property acquired after November 20, 2018 and before 2025) or, under proposed changes, to reaccelerated investment incentive property (RIIP) — generally property acquired after 2024 that becomes available for use before 2034. For most classes, RIIP treatment instead adds half the net cost to your first-year CCA base. Net effect for a 2025 purchase:
- Class 8 desk: 1.5 × 20% = 30% of cost in year one (instead of 10%).
- Class 50 computer: the enhanced factor takes the first-year deduction to 100%.
- Class 12 software: no uplift factor, but the half-year rule is off — 100% in year one.
- Class 10 vehicle: 1.5 × 30% = 45% of the (capped, business-use) cost in year one.
Two honest caveats: the CRA labels the RIIP rules "under proposed changes," and the older immediate expensing (DIEP) window is closed for new purchases — property had to be available for use before 2025 to qualify.
How Area A works (the short version)
Area A is a chart with columns 1 to 19 (plus the rate, claim, and closing-balance columns) — it looks worse than it is. The flow: opening balance for each class (column 2, from last year's closing balance) + additions (column 3, business part only, from Areas B/C) − disposals (column 5, from Areas D/E) gives your undepreciated capital cost (UCC). The middle columns apply the first-year adjustments above; the result is the base you multiply by the class rate. Add up the class-by-class claims and the total goes on line 9936.
Buildings go through Area C and land through Area F — but you cannot claim CCA on land, ever. And even in a year you claim nothing, record your additions and disposals in the chart anyway; the CRA says so, and your future self needs the balances.
Rules worth knowing
- You never have to claim the maximum. Anything from zero to the max is fine. In a low-income year it's often smarter to claim less and save the UCC for a year when the deduction is worth more.
- Business-use percentage. Only the business share depreciates. Use your car 60% for business (by kilometres logged) and you claim 60% of the CCA.
- Short first year = prorated claim. Started your business mid-year? Multiply your CCA by the number of days in the fiscal period over 365. The CRA's own example: a June 1 start gives 214/365 of the full claim.
- Available for use. You generally can't claim until the property is actually in use (or the second tax year after purchase, whichever comes first) — ordering a camera on December 30 that arrives in January doesn't buy a deduction this year.
- Think twice before claiming CCA on your home. It can jeopardize your principal-residence exemption when you sell — the same warning we give in the Part 7 home-office guide.
When you sell: recapture and terminal loss
Disposing of property closes the loop. If the proceeds push a class's UCC negative, that's recapture — you've deducted more than the property really depreciated, and the excess comes back as income on line 8230. If the class ends up empty but with a positive balance left, that's a terminal loss, deductible on line 9270. Exception: Class 10.1 vehicles get neither — instead you may claim half a year's CCA in the year you sell (the "half-year rule on sale") if you owned the vehicle at the end of last year.
Prefer not to hand-walk 19 columns? The generator handles the expense side of your T2125; pair it with this guide for the CCA chart.
T2125 Generator → Full T2125 line-by-line reference →FAQ
Is my laptop an expense or CCA?
CCA — a laptop is capital property (Class 50), not an office expense on line 8810. The good news: acquired after April 15, 2024 and in use before 2027, it qualifies (under proposed changes) for a 100% first-year deduction, so the cash effect can be the same as expensing it.
Where do software subscriptions go?
Monthly SaaS subscriptions are operating costs (line 8810 in practice). CCA Class 12 is for software you buy outright — a perpetual licence, not a subscription.
I bought a $45,000 car in 2025. What's my CCA base?
It's a Class 10.1 vehicle (over the $38,000 threshold), so your base is capped at $38,000 plus the sales taxes on that amount — times your business-use percentage. The excess over the cap never depreciates.
Do I have to claim CCA every year?
No. It's optional, from zero up to the maximum. Unclaimed amounts stay in the class balance for future years.
Can I still use immediate expensing?
Only for property that was available for use before 2025 — the DIEP window is closed for new purchases. For 2025 buys, the RIIP first-year enhancements above are the relevant break.
Follows CRA Guide T4002 Chapter 4 and the CRA's CCA-rates and Area A pages (fetched and verified 2026-07-03; CRA pages dated 2026-04-16, describing fiscal periods ending in 2025 — figures like the $38,000 Class 10.1 threshold are the 2025 amounts). Several first-year rules are marked "under proposed changes" by the CRA. Estimates and organization only — not tax, legal, or accounting advice. Confirm with the CRA or a qualified professional before filing.