What is the capital cost allowance (CCA) on zero-emission vehicles?

Generally, the cost of an asset that loses its value (deprecitates) over time can’t be claimed all at once for income tax. But the cost can be spread over a number of years for tax purposes using the CRA’s Capital Cost Allowance, or CCA. With CCA, different types of assets are grouped into various CCA classes that depreciate at different rates. CCA classes 54 and 55 (introduced in 2019) are strictly for Zero Emissions Vehicles (ZEV).

A ZEV is a vehicle designed for highway or street use that’s either:

• A plug-in hybrid with a battery capacity of at least 7kWh or 
• Fully electric or 
• Powered by hydrogen

Here are a few more rules:

• 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 and 2025
  • 55% for 2026 and 2027
• There's a per-vehicle limit on the allowable additions to Class 54:
  • $61,000 after 2022
  • $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 of disposal 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.