Incentives for zero-emission program

We know that the higher upfront purchase 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

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 passenger car, where the base model Manufacturer's Suggested Retail Price (MSRP) is less than $55,000; and
  • higher priced trims of these vehicles, up to a maximum MSRP of $65,000, will also be eligible for purchase incentives;

or

• a station wagon, pickup truck (light truck), sport utility vehicle (SUV), minivan, van, or special purpose vehicle, where the base model Manufacturer's Suggested Retail Price (MSRP) is less than $60,000; and
  • higher priced trims of these vehicles, up to a maximum MSRP of $70,000, 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 an electric range equal to or greater than 50 km.
• Shorter range plug-in hybrid electric vehicles are eligible for up to $2,500;
  • shorter range plug-in vehicles have an electric range under 50 km.

Eligible vehicles

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 (i.e. vehicles registered for the first time). 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.

Important: Transport Canada reserves the right to remove vehicles from the eligibility list if they no longer comply with program requirements.

Incentive Limits

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.
• As of March 28, 2023, carsharing companies that are pre-approved by Transport Canada and listed below are eligible for up to 50 incentives under this program in a calendar year.

In order to be eligible under the iZEV program as a carsharing company, a company must:

1. be a not-for-profit or for-profit organization, with its own business number; and
2. offer a membership or subscription-based program, whereby individuals or entities who become members or subscribers are entitled to 24/7 self-service access to a fleet for use at regular intervals (usually with a per-minute or per-hour fee).

List of eligible carsharing companies under the iZEV Program:

• There are no eligible carsharing companies at this time.

To be added as an eligible carsharing company under the iZEV Program, please send an email to iZEV-iVZE@tc.gc.ca.

Only carsharing companies deemed eligible by Transport Canada, based on the above-mentioned criteria, can receive up to 50 incentives per calendar year for eligible vehicle purchases or lease made on or after March 28, 2023. Eligibility, including the continuation of eligibility, remains at the discretion of Transport Canada.

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 tax write-off for zero-emission vehicles to support business adoption.

Businesses that receive an incentive from the federal iZEV Program can't use the tax 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.