A vehicle you buy for the business has its cost deducted over years through capital cost allowance (CCA), and the class it belongs to sets how. Your passenger vehicle can belong in either Class 10 or Class 10.1. Class 10.1 is the one for passenger vehicles over the cost limit — the more expensive ones, whose deductible cost the Canada Revenue Agency (CRA) caps.
What goes in this class
A passenger vehicle that cost more than the prescribed limit for the year you acquired it. To work out which class a vehicle belongs in, you use its cost before you add the GST/HST or the PST. The CRA sets the limit separately for each acquisition year and lists the amounts on its page of classes.
The class has its own rate, which is on the same page.
What is different about it
Each vehicle gets its own row. List each Class 10.1 vehicle separately in Area A of Form T2125, Statement of Business or Professional Activities, rather than pooling them.
The capital cost is capped. What enters the calculation is not the price you paid. It is the prescribed amount for the acquisition year, plus the GST/HST or PST calculated on that prescribed amount — not on the actual price. The part of the price above the cap never enters the CCA base.
Disposing of one is handled differently. Under the immediate expensing rules, if you dispose of a passenger vehicle acquired after April 18, 2021 to a person or partnership you deal with at arm's length, and its cost exceeds the prescribed amount, the proceeds of disposition are adjusted by a factor equal to the prescribed amount as a proportion of the actual cost of the vehicle.
What does not
A passenger vehicle at or under the year's limit. It goes to Class 10.
An eligible zero-emission vehicle. It goes to Class 54, unless you elect out of that class.
What to keep
Keep the bill of sale or purchase invoice, showing the seller, the date, the vehicle, the price before tax, and the GST/HST or PST shown separately. Class membership turns on the price before tax, and the capped capital cost is built from the prescribed amount plus the GST/HST or PST on it — so a document that separates price from tax is what both of those calculations start from.
Keep the paperwork for a vehicle you sell or trade in too. Dossier tags the invoice and files it with the year's records; the amounts themselves are settled on the return. Don't send the invoice in with your return — keep it in case the CRA asks to see it.
Official CRA sources
Source: Canada Revenue Agency (canada.ca). Not tax advice.