We know that the higher cost of zero-emission vehicles (ZEVs) can make it more difficult to adopt this clean technology. The Incentives for Zero-Emission Vehicles (iZEV) Program and tax write-offs for businesses are helping to make it more affordable.
Purchase and lease incentives
The iZEV Program offers point-of-sale incentives for consumers who buy or lease a ZEV vehicle. Only the vehicles listed on our website are eligible for an incentive when they're purchased or leased for at least 12 months, on or after the eligibility date.
Before including a car on the list of eligible vehicles, Transport Canada has reviewed an application from the automaker and has found that the vehicle meets the iZEV Program requirements. Namely, that the vehicle is:
- a vehicle with six seats or less, where the base model Manufacturer's Suggested Retail Price (MSRP) is less than $45,000; and
- higher priced versions of these vehicles, up to a maximum MSRP of $55,000, will also be eligible for purchase incentives;
- a vehicle with seven or more seats, where the base model Manufacturer's Suggested Retail Price (MSRP) is less than $55,000; and
- higher priced versions of these vehicles, up to a maximum MSRP of $60,000, will also be eligible for purchase incentives.
Types of incentives
There are two levels of incentives:
- Battery-electric, hydrogen fuel cell, and longer range plug-in hybrid vehicles are eligible for up to $5,000;
- longer range plug-in vehicles have a battery capacity of at least 15 kWh (kilowatt-hours)
- Shorter range plug-in hybrid electric vehicles are eligible for up to $2,500;
- shorter range plug-in vehicles have a battery capacity of less than 15 kWh
To be eligible under the iZEV Program, a vehicle must:
- meet all of Canada's Motor Vehicle Safety Standards;
- be meant for use on public streets, roads, and highways; and
- have at least four functioning wheels and be able to drive on a highway (in other words, not a low-speed vehicle)
Only new ZEVs are eligible for the federal incentive (in other words, vehicles that haven't been plated before). Eligible ZEVs that are demonstrators (a demo vehicle that buyers can test drive) are considered new vehicles and are eligible for the incentive as long as the odometer reads less than 10,000 km.
Incentives can be applied to eligible ZEVs leased for at least 12 months, but will be prorated (adjusted) based on the length of a lease less than 48 months. For example, a 48-month lease is eligible for the full incentive, while a vehicle with a 24-month lease will be eligible for half the incentive.
Vehicles are still eligible for the incentive even if delivery, freight and other fees (like vehicle colour, add-on accessories (e.g., a roof rack), options, and packages) push the actual purchase price over these set limits. As long as a vehicle (the year, make, model, and trim) appears on the list of eligible vehicles, an incentive can be provided. A “trim” is a preset package of equipment and finishes offered for a particular vehicle model (for example: base, sport, touring, etc.). A vehicle model can have multiple trim levels. Different trim levels will usually have different prices.
There is a limit to how many eligible ZEVs Canadians can purchase or lease under the iZEV Program. Individuals are eligible for one incentive under this Program in a calendar year. Businesses and provincial/territorial and municipal governments operating fleets are eligible for up to 10 incentives under this Program in a calendar year.
Important: TC reserves the right to remove vehicles from the eligibility list if they no longer comply with program requirements.
How to receive the incentive
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.
Tax write-offs for businesses
Budget 2019 provided for a 100% write-off for zero-emission vehicles to support business adoption. Eligible ZEVs for the tax write-off include a motor vehicle that is a plug-in hybrid (with a battery capacity of at least 7 kWh) or vehicles that are fully electric or fully powered by hydrogen, including light-, medium- and heavy-duty vehicles purchased by a business. This measure applies to eligible ZEVs purchased for use on or after March 19, 2019 and before January 1, 2024. Where the capital cost for eligible ZEVs (e.g., cars and SUVs) exceeds $55,000, the 100% write off will be limited to $55,000 plus the federal and provincial sales tax that would have been paid if the vehicle was purchased for $55,000.
Businesses that receive an incentive from the federal iZEV Program can't use the 100% write-off for ZEVs. Businesses can only use one or the other.
For more information on the tax write-off for these vehicles, businesses and self-employed people can contact the Canada Revenue Agency at 1-800-959-5525.