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 (element F of Regulation 1100(2)). Paragraphs (a) to (c), (e) to (i), (k), (l) and (p) to (s) are exempt and allow the full 100% in year one. Paragraphs (d), (j), (m), (n) and (o), which include dies and moulds and application software, are subject to the half-year rule, meaning 50% deduction in year one and 50% in year two, unless the property qualifies for the accelerated incentive. Property acquired after 2024 can qualify if it meets the RAIIP acquisition, available-for-use, prior-ownership and rollover conditions (Regulation 1104(4.01)); the half-year rule is then suspended, and because Class 12 gets no 1.5× uplift, the first-year claim is 100%.
• Paragraphs of common interest:
  • (c) kitchen utensils costing less than $500 (exempt).
  • (d) dies, jigs, patterns, moulds and lasts (subject to the half-year rule).
  • (e) medical or dental instruments costing less than $500 (exempt).
  • (h) tools costing less than $500, other than electronic communication devices and data processing equipment that can do more than measure, locate or calculate (exempt).
  • (m) television commercials and (n) certified feature films and productions (subject to the half-year rule).
  • (o) "computer software" that is not systems software (applications), subject to the half-year rule.
  • (r) video cassettes, laser discs and DVDs acquired for rental and not expected to be rented to one person for more than 7 days in any 30-day period (exempt).
• The $500 threshold applies per item, not per invoice. Ten hand tools at $400 each are Class 12, not pooled and averaged.
• When a tool, utensil or instrument costs $500 or more, it moves to Class 8 at 20%. Computer hardware goes to Class 50 whatever it costs.

Example

A BC corporation in 2026 buys:

• $450 cordless drill (single hand tool): Class 12, paragraph (h), exempt from the half-year rule.
• $1,200 perpetual accounting-software licence, bought new: Class 12, paragraph (o). Software is normally under the half-year rule, but a new licence acquired after 2024 is reaccelerated investment incentive property, so the half-year rule is suspended.
• $3,000 laptop: Class 50, not Class 12.

Assume a full calendar tax year, all purchases and availability for business use on July 1, 2026, tax capital costs as listed, no assistance, and that all RAIIP conditions are met.

1. Class 12 additions: $450 + $1,200 = $1,650.
2. CCA on the $450 tool: $450 × 100% = $450 in 2026.
3. CCA on the $1,200 software: $1,200 × 100% = $1,200 in 2026. Had it not qualified for the accelerated incentive, the half-year rule would have allowed $600 in 2026 and $600 in 2027.
4. Total 2026 Class 12 CCA = $450 + $1,200 = $1,650.
5. The laptop is deducted through Class 50 separately: acquired after April 15, 2024 and available for use before 2027, it is written off 100% ($3,000) in 2026.

Common mistakes

• Putting a $600 tool in Class 12 because "it is a hand tool". The $500 threshold is a hard line; at $500 or more, it goes to Class 8.
• Lumping all software into Class 12 paragraph (o). Systems software belongs with the hardware in Class 50.
• Applying the half-year rule to small tools, utensils or instruments. Paragraphs (c), (e) and (h) are exempt, so the full cost is deducted in the first year.
• Applying the half-year rule to software that qualifies for the accelerated incentive. A new licence bought in 2026 is written off in full in the first year.
• Treating cloud-based SaaS subscriptions as Class 12. A subscription fee is a current-period expense, not depreciable property. A purchased licence’s terms and the enduring rights acquired determine whether it is capital; prepayments and implementation costs also need their own analysis.
• Treating an accounting materiality threshold as a tax election. A capital tool still follows its tax class even if the books expense it; current consumable supplies are a different category.

Official sources

CRA class descriptions, enacted first-year factors, and eligibility definitions.

Related concepts

Class 12 is one of the fastest write-offs on the Schedule II menu. The original $1.5 million immediate-expensing measure does not cover 2026 purchases, and qualifying Class 50 computers acquired after April 15, 2024 and available for use before 2027 are also written off in full. It often pairs with Class 8 (items at or above the threshold) and with Class 50 for computer systems software. Mechanics still follow CCA overview.