Capital Cost Allowance for Kitchen Equipment: Depreciation Tips for Restaurants — CPA Firm Near You, Montreal

Introduction

Restaurant owners invest heavily in kitchen equipment such as ovens, refrigerators, preparation tables, freezers, stoves, fryers, mixers, and ventilation systems. These assets lose value over time, and the tax system allows you to deduct this depreciation as Capital Cost Allowance (CCA). Understanding how to classify equipment, which CCA rates apply, and how to maximize deductions can significantly reduce your taxable income. This guide explains how CCA works, how to claim it properly, and how a CPA firm near you in Montreal can help you stay compliant and tax-efficient.

Legal and Regulatory Framework

The Income Tax Act classifies depreciable property into designated CCA classes. Most kitchen equipment falls into Class 8 with a 20 percent declining-balance depreciation rate. Refrigeration systems or integrated HVAC components may fall into Class 1 at different rates depending on the structure. Smallwares may be expensed directly if they meet the threshold for immediate deduction. Additions and disposals must be tracked in the CCA schedule each year. The half-year rule generally applies, limiting the first-year deduction to half of the normal CCA rate. CRA requires restaurants to maintain invoices, purchase dates, installation records, and a detailed asset list to support claims. Revenu Québec follows the same classification rules for provincial filings.

Key Court Decisions

Courts have repeatedly emphasized that depreciable property must be supported by proper documentation. In several rulings, taxpayers who failed to distinguish between repairs and capital improvements saw deductions denied. Other cases clarified that assets forming part of the building structure cannot be categorized as Class 8 equipment. Courts also ruled that personal-use items, or items not used to generate business income, are not eligible for CCA. Proper categorization and evidence remain essential.

Why CRA and Revenu Québec Target Kitchen Equipment

Restaurants often make frequent upgrades, repairs, and equipment purchases. If these expenses are not categorized correctly, CRA may consider them capital rather than deductible repairs. Auditors examine invoices, bank statements, and asset listings to verify that CCA claims are accurate. Large equipment purchases, write-offs, or inconsistent asset balances increase audit risk. Missing installation records or misclassified HVAC and refrigeration systems frequently lead to reassessments.

Mackisen Strategy

At Mackisen CPA Montreal, we help restaurant owners correctly categorize equipment, optimize depreciation schedules, and separate repairs from capital expenditures. We build complete fixed-asset registers, apply proper CCA rates, and ensure all additions and disposals are documented. Our team analyzes opportunities for immediate expensing where permitted and designs tax-efficient purchasing strategies for restaurants planning kitchen upgrades. During CRA or Revenu Québec audits, we defend asset classifications, reconstruct schedules, and ensure your CCA claims withstand scrutiny.

Real Client Experience

A Montréal restaurant invested heavily in new kitchen equipment, but their bookkeeping system lumped repairs and capital purchases together. CRA questioned the classifications and attempted to deny several deductions. We reconstructed their asset list, reclassified equipment properly, applied the correct CCA rates, and provided supporting documentation. This significantly reduced the reassessment and gave the client a clear depreciation plan for future purchases.

Common Questions

Which CCA class applies to most kitchen equipment?

Most equipment falls under Class 8 at a 20 percent declining-balance rate.

Can small kitchen tools be expensed immediately?

Yes, if they qualify as consumable smallwares or meet the immediate deduction threshold.

Does the half-year rule always apply?

Generally yes, but some exceptions exist for assets acquired late in the fiscal year or under specific incentive programs.

Are ventilation or refrigeration systems depreciated differently?

Large integrated systems may fall under Class 1 or other building-related CCA categories.

Why Mackisen

With more than 35 years of combined CPA experience, Mackisen CPA Montreal helps businesses stay compliant while recovering the taxes they’re entitled to. Whether you’re filing your first GST/QST return or optimizing multi-year refunds, our expert team ensures precision, transparency, and protection from audit risk.