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$61,000 Tax Write off for Electric Vehicles in Canada; Abdullah CPA

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The Incentives for Zero-Emission Vehicles (iZEV) Program and tax write offs for electric vehicles in Canada are helping to make it more affordable.

Types of Federal Incentives

There are two types of Federal incentive programs available:

  1. iZEV Program: incentive that reduces the purchase price of eligible vehicles by $2,500 to $5,000 
  2. Tax Incentive for Businesses: an increase to Capital Cost Allowance (CCA) limits so that your business can write-off up to $61,000 in the 1st year.

As long as a vehicle (the year, make, model, and trim) appears on the list of eligible vehicles, an incentive can be provided.

1- iZEV Program:

The incentive will be applied at the point-of-sale by the dealership. It will appear directly on the bill of sale or lease agreement on eligible ZEVs on, or after, the eligibility date. The dealer must apply taxes and fees to the purchase or lease before applying the incentive.

The dealer must submit the documentation required to be reimbursed for an incentive provided to consumers at the point-of-sale.

The federal incentive for eligible ZEVs will be applied in addition to any provincial or territorial incentive offered.

2-Tax Write off for Electric Vehicle in Canada

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 $61,000 plus sales tax for 2023 for zero-emission passenger vehicles. Whereas a Non ZEV has Maximum Capital Cost deduction limit of $30,000 plus HST.

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

A Non Zero Emission Vehicle has a Maximum Capital Cost allowance set for $30,000 in Canada and that results in Tax Savings of $13,000 with 30% CCA Rate.

Making use of Enhanced Depreciation Rule of Electric vehicles will result in Tax Savings of $28,000 in Canada in One Year instead of Tax saving of $13,000 for Non ZEV.

Get in touch to have more information for Tax Write off for Electric Vehicles in Canada.

If you are looking for an Accountant who can offer personalized service for your Tax Planning and manage your Bookkeeping and Corporate Taxes than Contact Abdullah CPA.

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