What is the capital cost allowance (CCA) on zero-emission vehicles?
Generally, the cost of an asset that loses its value (depreciates) over time can’t be claimed all at once for income tax. But the cost can be spread over several 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:
ZEV passenger vehicles bought on or after March 18, 2019, are now in Class 54 with a 30% CCA rate. Previously, they were in Class 10 or 10.1.
Other ZEVs, such as taxis, rental cars, and large trucks, were in CCA Class 16 before March 18, 2019. ZEVs bought on or after that date are now in Class 55 with a 40% CCA rate.
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 sell a Class 54 zero-emission passenger vehicle that costs more than the limit, you’ll need to reduce the amount you claim from the sale.
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.
