An asset that loses value over time through usage (that is, it depreciates), can be partly expensed each year, over the course of the asset’s useful life. When depreciated this way on a tax return under the CRA’s rules, it's called Capital Cost Allowance, or CCA. With CCA, different types of assets are grouped into CCA classes. CCA classes 54 and 55 (introduced in 2019) are strictly for Zero Emissions Vehicles (ZEV).
A ZEV is:
- A plug-in hybrid with a battery capacity of at least 7kWh or
- Fully electric or
- Powered by hydrogen
and is designed for highway or street use.
Here are a few more rules, very briefly:
- Whereas ZE passenger vehicles were in CCA Class 10 or 10.1 before March 18, 2019, ZEV passenger vehicles purchased on or after that date go in Class 54, with a CCA rate of 30%
- Whereas other ZEV (like taxis, rental cars, large trucks), were in CCA Class 16 before March 18, 2019, these ZEV purchased on or after that date go in Class 55 with a CCA rate of 40%
- There's a temporary enhanced ZEV first-year CCA rate:
- 100% for eligible ZEV acquired after March 18, 2019, and before 2024
- 75% for 2024-2025
- 55% for 2026-2027
- There's a per-vehicle limit on the allowable additions to Class 54:
- $61,000 for 2023
- $59,000 for 2022
- $55,000 for 2019 to 2021
- If you dispose of a Class 54 ZE passenger vehicle which cost more than the limit, there's a downward adjustment to the proceeds that you will claim
- All of your ZE passenger vehicles stay in a single Class 54 pool. There isn't a separate pool for each vehicle costing more than the lower limit, the way there is for passenger vehicles in Class 10.1
For more information see Class 54 and 55 at Classes of Depreciable Properties
For detailed information see Note 5 and Note 12 at T5013SCH8 Capital Cost Allowance (CCA) - Schedule 8.
