Things you buy for the business that last for years have their cost deducted over years rather than all at once. That yearly deduction is capital cost allowance (CCA), and every depreciable property you own belongs to a class that sets how it is deducted. On Form T2125, Statement of Business or Professional Activities, the classes are the rows of Area A.
Class 8 is the catch-all — furniture, appliances, and equipment that is not included in another class. It is the class most ordinary business purchases land in.
What goes in this class
The Canada Revenue Agency (CRA) gives these examples:
- furniture and appliances
- tools costing at or above the small-tools threshold, measured per tool
- some fixtures, machinery, and refrigeration equipment
- outdoor advertising signs
- other equipment you use in the business
- photocopiers, and electronic communications equipment such as fax machines and electronic telephone equipment
The class has its own rate, set out on the CRA's page of classes.
What does not
A tool that cost less than the small-tools threshold. It goes to Class 12, where most small tools are fully deductible in the year of purchase. The CRA states the cost per tool that separates the two classes.
Data network infrastructure equipment acquired after March 22, 2004. That equipment, and the systems software for it, belongs to Class 46. Acquired before that date, it stays in Class 8.
Worth knowing
Equipment that costs at or above the amount the CRA names can be elected into a separate class. The rate does not change, but a separate CCA deduction is then calculated for a five-year period. When all the property in that separate class is disposed of, the undepreciated capital cost — the part of the cost not yet deducted — is fully deductible as a terminal loss. Any balance left in the separate class at the end of the fifth year has to be transferred back to the general class it would otherwise belong to.
To make the election, attach a letter to your income tax return for the tax year in which you acquired the property.
What to keep
Keep the purchase invoice for everything you put in Class 8: who sold it, the date, what it was, and what it cost. Cost per tool is what separates Class 8 from Class 12, so an invoice that lists the tools one by one is worth more than one that gives a total.
Keep the same paperwork for anything you sell or scrap during the year, since a disposition changes the class balance. Dossier tags the invoice and files it with the year's records so it is in front of you when you file. Don't send it 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.