CCA Class 12. Small Tools and Software

Definition

Class 12 is the 100% CCA class for a list of short-lived or inherently low-cost property enumerated in Schedule II. Typical items include application software (non-systems), tools costing less than $500, kitchen utensils, medical and dental instruments under $500, video cassettes and DVDs for rental, and certain other items. The idea is that recovery through CCA is immediate because the underlying property either has a short useful life or is inexpensive enough that tracking depreciation year by year is not worth the effort.

Key rules

• Rate: 100% on UCC. Because the rate is 100%, the class is fully deducted as soon as the half-year reduction (where it applies) allows.
• Half-year rule: Class 12 is split. Paragraphs (i), (iii), (iv), (v), (vi), (vii), (x), and (xi) are subject to the half-year rule, meaning 50% deduction in year one and 50% in year two. Application software in paragraph (o), and a few other items, are exempt from the half-year rule and allow the full 100% in year one.
• Paragraphs of common interest:
  • (c) video tapes and DVDs acquired for short-term rental.
  • (h) kitchen utensils costing less than $500.
  • (i) medical or dental instruments costing less than $500 (subject to half-year rule).
  • (k) tools costing less than $500.
  • (o) "computer software" that is not systems software (applications).
  • (p) motion picture film and videotape.
• The $500 threshold applies per item, not per invoice. Ten hand tools at $400 each are Class 12, not pooled and averaged.
• When an item is above the threshold, it moves to Class 8 at 20% (or Class 50/52 for computer hardware).

Example

A BC corporation in 2026 buys:

• $450 cordless drill (single hand tool): Class 12, paragraph (k), half-year rule applies.
• $1,200 QuickBooks Desktop licence: Class 12, paragraph (o), no half-year rule.
• $3,000 laptop: Class 50, not Class 12.

Calendar year end.

1. Class 12 additions: $450 (half-year rule) + $1,200 (no half-year rule) = $1,650.
2. CCA on the $450 tool: $450 × 100% × 50% = $225 in 2026, then $225 in 2027.
3. CCA on the $1,200 software: $1,200 × 100% = $1,200 in 2026.
4. Total 2026 Class 12 CCA = $225 + $1,200 = $1,425.
5. Laptop is deducted through Class 50 (55% rate with AIIP enhancement) separately.

Common mistakes

• Putting a $600 tool in Class 12 because "it is a hand tool". The $500 threshold is a hard line; over that, it goes to Class 8.
• Lumping all software into Class 12 paragraph (o). Systems software belongs with the hardware in Class 50.
• Forgetting the half-year rule on small tools. Paragraph (k) is subject to it.
• Treating cloud-based SaaS subscriptions as Class 12. A subscription fee is a current-period expense, not depreciable property. Only perpetual or long-term licences are capitalised.
• Capitalising tools that are more naturally recorded as current supplies. Businesses can expense small items consistently with reasonable materiality; see materiality.

Related concepts

Class 12 is the fastest write-off on the Schedule II menu besides immediate expensing. It often pairs with Class 8 (items above the threshold) and with Class 50 for computer systems software. Mechanics still follow CCA overview.