Tax Tips- Rebates for Fuel-Efficient Vehicles Effective May 1, 2019
Rebates for Fuel Efficient Vehicles
The federal government and some provinces provide rebates when fuel efficient vehicles, hybrid vehicles, or alternative fuel vehicles are purchased. See the following links:
Federal iZEV Program
The federal incentive program for zero-emission vehicles (ZEVs) will provide incentives of up to $5,000 for consumers who buy or lease an eligible ZEV. The program will be in effect May 1, 2019.
Ontario Rebates for Fuel-Efficient Vehicles
In 2018, Ontario cancelled the cap and trade program, which funded the Electric and Hydogen Vehicle Incentive Program and the Electric Vehicle Charging Incentive Programs. These programs were cancelled. See the Ontario Government information Ministry of Transportation website.
Canadian Excise Tax on Fuel-Inefficient Vehicles
To encourage Canadians to make eco-friendly consumer choices, the Government of Canada adopted an excise tax (or green levy) on fuel-inefficient vehicles. See Canada Revenue Agency publication ETSL64 Excise Tax on Fuel-Inefficient Vehicles. There is a list of vehicles and their applicable excise tax for each year after 2006. For 2018, the highest tax was $4,000 per vehicle, but the majority of vehicles have no tax.
Purchase and lease Incentives
There are two levels of incentive:
- Battery-electric, hydrogen fuel cell, and longer range plug-in hybrid vehicles are eligible for an incentive of $5,000
- Shorter range plug-in hybrid electric vehicles are eligible for an incentive of $2,500
To be eligible for the Incentives for Zero-Emission Vehicles program, you have to purchase or lease:
- a vehicle with six seats or fewer, where the base model (trim) Manufacturer’s Suggested Retail Price (MSRP) is less than $45,000;
- higher priced versions (trims) of these vehicles, up to a maximum Manufacturer’s Suggested Retail Price (MSRP) of $55,000, will also be eligible for purchase incentives;
Or
- a vehicle with seven seats or greater, where the base model Manufacturer’s Suggested Retail Price (MSRP) is less than $55,000;
- higher priced versions (trims) of these vehicles, up to a maximum Manufacturer’s Suggested Retail Price (MSRP) of $60,000, will also be eligible for purchase incentives;
You will still be eligible for the incentive even if delivery, freight and other fees, such as vehicle colour and add-on accessories, push the actual purchase price over these set limits.
Tax Write-Off
Budget 2019 proposed a 100-per-cent write-off for zero-emission vehicles to support business adoption. Eligible zero-emission vehicles include, a motor vehicle that is a plug-in hybrid (with a battery capacity of at least 15 kWh) or vehicles that are fully electric or fully powered by hydrogen, including light-, medium- and heavy-duty vehicles purchased by a business. The proposed measure applies to eligible vehicles purchased and become available for use on or after March 19, 2019 and before January 1, 2024. Where the capital costs for eligible zero-emission passenger vehicles (e.g., cars and SUVs) exceeds $55,000, the 100 per-cent 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.
Vehicles in respect of which assistance is paid under the new federal purchase incentive will be ineligible for the 100-per-cent write-off.
Helpful Links