Hi, If a client disposes of a class 10.1 vehicle in the year and purchases another during the same year, is the following correct?
Just making sure the UCC/disposal of the old vehicle doesn’t have to first reduce the cost of the addition since they are both class 10.1 and are separate of one another?
Thank you!
I may be missing something but I never take CCA in the year of disposal.
Each automobile with a cost in excess of the limit is allocated to a separate capital cost allowance (CCA) Class 10.1.
From what I’ve read you can for class 10.1 (not class 10). " For a Class 10.1 vehicle you disposed of in 2024, you may be able to claim 50% of the CCA that would be allowed if you had still owned the vehicle at the end of the year. This is known as the half-year rule on sale ." (ref: Capital cost allowance (CCA) - Canada.ca - see Part B - Class 10.1 property)
Thank you. Because they are in “separate capital cost allowance” pools, does this mean the disposal of the old vehicle is calculated/reported separately from the addition of the new vehicle; therefore, the disposal of the old does not affect the UCC of the new?
Yes, because they are in separate classes.
This means you must still have owned it at the year end, not disposed of it. You don’t claim CCA if you dispose of it in the same year that you bought it.
Thank you, but I believe you can claim 50% of the CCA on year of disposal. The wording says you can claim 50% of the CCA that would be allowed if you had still owned the vehicle at the end of the year, meaning you can claim 50% of what you would have claimed in a normal year if you hadn’t sold it (similar to the 50% rule on additions). If you look at the following link from CRA ( Capital cost allowance (CCA) - Canada.ca) under Classes of depreciable properties/Class 10 and Class 10.1/Class 10.1 you’ll see a chart called “Comparison of class 10 and class 10.1 vehicles based on a number of criteria or topics” which says “Yes” to “Half-year rule on sale.”
You have them in different class, you claim CCA, don’t you have to add CCA back because it’s disposed or deemed disposed? Also, since it’s capital property, maybe have to calculate capital gain? IF FMV is higher than cost
Because it’s 10.1 there’s no recapture or terminal loss.
Class 10.1 has rules that apply only to it. It doesn’t handle dispositions in the usual way.
And yes in theory you could have a capital gain on the disposition, but the chance of that happening with a vehicle are miniscule.
Learned something new, is that all it’s required to determined if a vehicle is in class 10 or 10.1 now?
Include your passenger vehicle in Class 10.1 if you bought it in 2024 and it cost more than $37,000 before tax. List each Class 10.1 vehicle separately.
The capital cost limits of a Class 10.1 passenger vehicle are as follows: $30,000 for vehicles acquired before 2022, $34,000 for vehicles acquired in 2022, $36,000 for vehicles acquired in 2023, and $37,000 for vehicles acquired in 2024, plus the GST/HST, or PST.
Also note the use of “passenger vehicle” here. Not every vehicle belongs in 10.1, just passenger vehicles (not work trucks, for example). Look up CRA’s definition if you’re unsure.
Your mom says you have an FHSA. is this correct? If so, when did you open it and did you make any corntributions in 2024
Is there anything else? I don’t want to miss anything.
Sue