of additions in the year; however, for 
some classes, a “half-year rule” applies 
that limits the increase in the year of 
acquisition to one-half of the net cost 
for purposes of computing CCA for that 
year. For dispositions, the UCC balance 
is reduced by the lesser of the proceeds 
of disposition and the original capital 
cost of the property.

The capital cost of a property for the 
purposes of calculating CCA may 
be reduced by the amount of any 
assistance that the taxpayer receives or 
is entitled to receive from a government, 
municipality, or public authority in 
respect of or for the acquisition of 
the property, less any amount of such 
assistance that the taxpayer has repaid. 
Investment tax credits (ITCs) claimed 
in respect of a particular property 
will also reduce the UCC. (ITCs are 
discussed in a separate section below.)

An asset is not added to a particular 
class and CCA cannot be claimed until 
the asset is available for use. An asset 
is considered available for use when 
it is first used for an income-earning 
purpose. Since the construction of a 
mine may take many years, there are 
special rules that allow acceleration of 
the time at which depreciable property is 
considered available for use. These rules 
permit the taxpayer to start claiming 
CCA during the lengthy construction 

period. Special rules also allow public 
corporations to start claiming CCA 
when depreciation is first claimed for 
financial reporting purposes. 
There are relatively few CCA classes 
that are particularly relevant to the 
mining industry. Most mining property 
is included in Class 41. Class 41(a) 
includes buildings, machinery, and 
equipment acquired prior to the 
commencement of production of a new 
mine or mines or for major expansion 
of an existing mine. A major expansion 
is an increase in mill capacity of 25%. 
Class 41(a.1) is property that is the same 
type as property included in Class 41(a) 
but that does not belong to Class 41(a) 
because it was acquired for a producing 
mine and not for a new mine or for the 
expansion of a mine. Class 41(a.1) is 
that percentage that the expenditures 
incurred in respect of a producing 
mine in excess of 5% of gross revenue 
from the mine for the year is of all 
the expenditures on such property. 
Example 3 illustrates the calculation.
Mining property that is not included in 
Class 41(a) or Class 41(a.1) is included 
in Class 41(b).

The CCA rate for Class 41 is 25%. 
However, a taxpayer is entitled to 
claim an additional amount of CCA 
(accelerated capital cost allowance, 
or ACCA) of up to 100% in respect of 

property belonging to Class 41(a) or 
Class 41(a.1). The ACCA claim cannot 
exceed the lesser of: 

• the taxpayer’s income from the new 

mine or mines, before resource 
deductions, minus the regular CCA 
deduction claimed for the year

and

• the remaining UCC in the class, 

without reference to the half-year rule. 

This rule is designed to prevent a 
taxpayer from claiming a Class 41(a) 
or 41(a.1) deduction equal to the income 
from the mine and then claiming 
regular CCA at 25% to apply against 
other income. 

The calculation of ACCA is illustrated in 
Example 4.

ACCA is being phased out over the 2017 
to 2020 calendar years in accordance 
with the schedule set out in Table 5.

Oil sands property is included in 
Class 41.1. Class 41.1 has a CCA rate 
of 25%, although a taxpayer may claim 
some ACCA in respect of oil sands 
property. ACCA in respect of oil sands 
property is also being phased out and 
such phase-out will be completed 
in 2014.

Table 5: Phase-Out Percentage for 
Accelerated Capital Cost Allowance 
for Mining, 2016–2020

Calendar Year

Percentage

2013 through 2016

100

2017

90

2018

80

2019

60

2020 and after

0

Calculation of Eligible Costs for Class 41(a.1)

A corporation earns gross revenues of $10 million from a mine and incurs 
expenditures on Class 41 property of $8 million. It is entitled to add to 
Class 41(a.1) 93.75% of $8 million or $7.5 million. This percentage is the 
percentage that $7.5 million (the expenditures in excess of 5% of the gross 
revenue) is of $8 million.

EXAMPLE 3

© 2013 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms 
affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

 

Deductions, Allowances, and Credits 

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