What does your dealership need to know about the incentives for zero-emission vehicles?

The Canadian federal government, along with several provincial governments, has introduced incentives to make the switch to zero-emission vehicles (ZEVs) more affordable for Canadian individuals and businesses. These incentives aim to increase the adoption of ZEVs — and it is important for your dealership to understand the details of these incentives so you can communicate these opportunities to your customers.

Let’s review the federal and provincial rebates — and explore the details of the accelerated tax write-offs for ZEVs.

What is a ZEV?

A ZEV is a vehicle designed to operate without producing tailpipe emissions. This includes plug-in hybrid, battery powered, or hydrogen fuel cell electric vehicles.

ZEVs include light-, medium-, and heavy-duty vehicles. Light-duty ZEVs are vehicles intended for personal use, such as cars, SUVs, or light pickup trucks.

Examples of medium- and heavy-duty ZEVs include cargo vans, trucks, shuttles, and other commercial vehicles.

What rebates and incentives are available for ZEVs?

Federal and provincial tax rebates and incentives are available to support the adoption of ZEVs. These incentives are offered at the point of sale and are implemented by the dealership. A dealership must generally enrol in the related program to receive or offer the incentive.

Click here for more information and to register for the rebate programs.

Federal rebates for ZEVs

The Incentives for Zero-Emission Vehicles (iZEV) program is a federal incentive that offers customers a benefit of up to $5,000 at the point of sale on the purchase of a light-duty ZEV.

The Incentives for Medium-Heavy-Duty Zero-Emission Vehicles (iMHZEV) program provides incentives to Canadian businesses purchasing or leasing medium- and heavy-duty ZEVs. The incentive provides up to $200,000 per medium- or heavy-duty vehicle, to a maximum of 10 incentives or $1 million (whichever comes first).

Provincial rebates for ZEVs

Certain provinces are also offering their own incentive programs to facilitate the adoption of ZEVs by Canadian individuals and businesses. These incentives are summarized below:

More information on any of the above programs is available here.

What accelerated tax write-offs are available for ZEVs?

Vehicles are typically deductible to taxpayers at a rate of 30 percent per year for passenger vehicles, or 40 percent per year for rental cars, taxis, or freight trucks. The federal government has introduced an accelerated tax write-off incentive for businesses for passenger vehicles that meet the definition of a ZEV in the first year of purchase.

The write-offs are as follows:

• 100 percent for ZEVs acquired after March 18, 2019, and before 2024
• 75 percent for ZEVs acquired after 2023 and before 2026
• 55 percent for ZEVs acquired after 2025 and before 2028

Canadian businesses must determine which incentive — the rebate or the accelerated tax write-off — is better suited for their cashflow needs, as both cannot be chosen for the same ZEV.

Take the next steps

For more information about the federal and provincial incentives for ZEVs, contact MNP’s Chris Schaufele.