Zero-Emission Vehicles

Two new CCA classes have been created for zero-emission vehicles acquired after March 18, 2019, and become available for use before 2028.

Class 54 motor vehicles and passenger vehicles excluding taxicabs and automobiles used for lease and rent

The CCA rate for this class is 30% but a higher deduction (up to a maximum of 100%) may apply for certain eligible vehicles acquired after March 18, 2019 and before January 1, 2028 (phase out starting in 2024).

The capital costs will be deductible up to a limit of $55,000 plus sales tax for 2019 for zero-emission passenger vehicles. The limit will be reviewed annually and special rules will apply in the year of disposition for such vehicles where the capital costs exceed that limit.

Class 55 for automobiles for lease or rent and taxicabs

The CCA rate for this class is 40%, but a higher deduction (up to a maximum of 100%) may apply for certain eligible vehicles acquired and available for use after March 18, 2019 and before January 1, 2028 (phase out starting in 2024).

To be eligible under Class 54 or Class 55, a zero-emission vehicle needs to meet all the following criteria:

• You acquired the zero-emission vehicle after March 18, 2019
• An assistance has not been paid by the Government of Canada under the federal purchase incentive
• The vehicle has not been used, or acquired for use, for any purpose before you acquired it
• The vehicle is essentially a motor vehicle designed or adapted for use on streets and highways (excluding a trolley bus or a vehicle designed or adapted to be operated only on rails)
• Is a plug-in hybrid with battery capacity of at least 7kWh or is fully:
  • electric; or
  •  powered by hydrogen.

An enhanced first-year CCA with the following phase-out period is available:

• 100% after March 18, 2019 and before 2024
• 75% after 2023 and before 2026
• 55% after 2025 and before 2028

The enhanced first year allowance will be calculated by:

1. increasing the net capital cost addition to the new class for property that becomes available for use before 2028, and applying the prescribed CCA rate for the class as described below:

For Class 54, applying the prescribed CCA rate of 30% to:

• 2 1/3 times the net addition to the class for property that becomes available for use before 2024
• 1 1/2 times the net addition to the class for property that becomes available for use in 2024 or 2025
• 5/6 times the net addition to the class for property that becomes available for use after 2025 and before 2028

For Class 55, applying the prescribed CCA rate of 40% to:

• 1 1/2 times the net addition to the class for property that becomes available for use before 2024
• 7/8 times the net addition to the class for property that becomes available for use in 2024 or 2025
• 3/8 times the net addition to the class for property that becomes available for use after 2025 and before 2028; and

2. suspending the existing CCA half year rule

The CCA will be applicable on any remaining balance in the new classes using the specific rate for the new class.