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Class 13 CCA

Updated: 2025-06-10

Learn how to create a class 13 leasehold interest. Although this topic focuses on how to do this in TaxCycle T2, these steps also apply to the T1, T3 and T5013 modules.

The capital cost of a leasehold interest of Class 13 property includes an amount that a tenant spends:

  • on improvements or alterations to a leased property that is capital in nature, other than improvements or alterations that are included as part of the building or structure 
  • to obtain or extend a lease or sublease of the property and pays it to the landlord

The maximum capital cost allowance (CCA) rate depends on the type of leasehold interest and the terms of the lease.

1. Leasehold interest addition to a new class 13

Example

Tax year: January 1, 2025, to December 31, 2025
Lease term: July 1, 2025, to June 30, 2030 (5-year term)
Amount of lease interest: $100,000

  1. Create a new class 13. On the S8Asset, select 13-a from the class dropdown menu.
  2. Enter the date the lease starts (Date acquired) and the date it ends (Date expires).
  3. TaxCycle automatically calculates the number of 12-month periods. If the lease term is less than five years or greater than forty years, TaxCycle’s calculation defaults to a minimum lease term of five years and a maximum lease term of forty years.
  4. In the Current Year Addition/Disposition Transactions section, enter the description, the transaction date, and the cost of addition of the leasehold interest.
  5. TaxCycle automatically calculates the Annual CCA.
  6. The transaction date must match the date acquired so that the annual CCA can be calculated. 

Screen Capture: Leasehold addition to a new class 13

2. Leasehold interest addition to an existing class 13

Example

Tax year: January 1, 2025, to December 31, 2025
Lease term: July 1, 2023, to June 30, 2028 (5-year term)

Cost of leasehold interest paid in 2023: $100,000
Annual CCA: $20,000 ($100,000/5-year lease term)
Opening UCC = $50,000

On July 1, 2025, additional leasehold interest was paid in respect of the existing lease agreement.
Cost of additional leasehold interest = $120,000

In this case, you must create two instances of class 13-a (one for the existing leasehold improvement and another for the addition of a new leasehold improvement to the same property).

If you carried forward a TaxCycle file, you can skip steps 1 through 5.

  1. Create a class 13-a on the S8Asset and enter information with respect to the existing leasehold interest.
  2. Enter the date the lease starts (Date acquired) and the date it ends (Date expires).
  3. Enter the number of 12-month periods (the minimum leasehold interest amortization period cannot be less than five years and the maximum period cannot be greater than five years).
  4. Enter the Annual CCA ($100,000/5 years).
  5. Enter the opening UCC. Screen Capture: New leasehold improvement
  6. Create another instance of class 13-a to record a leasehold improvement addition to the same property.
  7. Enter the leasehold interest term. The Date acquired must be the date the additional leasehold interest was paid for. The Date expires must be the end date of the lease term of the property. TaxCycle automatically calculates the number of 12-month periods.
  8. Enter the description, the transaction date and the cost of addition (leasehold amount).
  9. The transaction date must match the date acquired so that the annual CCA can be calculated. Screen Capture: Second leasehold improvement