Zero-emission vehicles (ZEV)

In 2019, the Canadian government introduced several incentives to make purchasing eligible zero-emission vehicles (ZEV), also called electric cars, more affordable.

A ZEV can be any of these:

  • Battery-electric — runs on electricity
  • Plug-in hybrid electric — combines a gas-powered engine with a battery that recharges by plugging it into an electric source
  • Hydrogen fuel cell — powered by an electric motor that runs on electricity created by an on-board fuel cell

If you are thinking of purchasing or have purchased a new eligible ZEV, the federal Incentives for Zero-Emission Vehicles (iZEV) Program, offers the following incentives to consumers and businesses:

  • purchase or lease point-of-sale incentives
  • enhanced capital cost allowance deduction with CCA Class 54 or 55

Important: You can only receive one of the two incentives offered by the program. If you received a point-of-sale incentive, you can’t claim the enhanced capital cost allowance deduction.

The iZEV federal purchase or lease incentives are:

  • $5,000 for a battery-electric, hydrogen fuel cell, or longer range plug-in hybrid vehicles (battery capacity is 15 kWh or more)
  • $2,500 for a shorter range plug-in hybrid electric vehicle (battery capacity is less than 15 kWh)

To be eligible, the ZEVs must be:

  • A vehicle with 6 seats or less where the base model Manufacturer’s Suggested Retail Price (MSRP) is less than $45,000 or
  • A vehicle with 7 seats or more, where the base model MSRP is less than $55,000

Note: Higher price versions of these vehicles will also be eligible as long as the MSRP is not more than $55,000 and $60,000, respectively.

The purchase or lease incentives are applied at point-of-sale (i.e. at dealerships) directly on the bill of sale or lease agreement of new eligible ZEVs that are purchased or leased on or after May 1, 2019. For leased vehicles, incentives will be prorated based on the length of the lease.

The federal purchase incentive for zero-emission vehicles is applied in addition to any provincial zero-emission vehicles incentive that might be available.

Within a calendar year, individuals can get one incentive and businesses can get up to 10 incentives.

You can claim the enhanced CCA deduction if you didn’t claim the iZEV federal purchase or lease incentives.

Two new Classes (54 and 55) were created for ZEVs that offer a 100% CCA deduction in the first year to Canadian businesses that have purchased ZEVs for work and which are available for use on or after March 18, 2019 and before 2024. A phase out will begin for ZEVs that become available for use after 2023.

Note: As an employee, if you used your personal ZEV for work in 2023 and have a T2200 (and a TP-64.3-V, if you’re a Québec resident) from your employer confirming that you’re required to use your vehicle to earn employment income, you’ll be able to claim the enhanced CCA deduction. For more information, refer to the CRA Employment expenses guide for more information and Revenu Québec’s Employment Expenses guide.

The CCA rate for Class 54 is 30% while Class 55 is 40%. For both classes, a higher deduction (up to a maximum of 100%) might apply to certain eligible vehicles.

Note: Used ZEVs and ZEVs for which CCA has previously been claimed are now also eligible for Class 54 or 55. This applies to ZEVs that were bought after March 1, 2020 and were available for use before 2028, provided that the vehicle:

  • Wasn’t acquired on a tax-deferred "rollover" basis

  • Hasn’t been owned by a person, partnership, or business that’s not dealing at arm's length with the taxpayer

If you’re self-employed and you purchased a ZEV for your business, you can claim the enhanced CCA deduction for your vehicle by following these steps in H&R Block’s 2023 tax software:

  1. On the left navigation menu, under the Credits & deductions tab, click Tax Topics.

  2. Select the Self-employment income & expenses checkbox.


  3. At the bottom of the page, click Add selected topics to my return.

  4. Click the Employment tab on the left navigation menu.

  1. If you are filing a:
    • T2125 form: Under the BUSINESS AND SELF-EMPLOYMENT INCOME heading, select the checkbox labelled Statement of business or professional activities (T2125), and click Continue.
    • T2125/TP-80-V form: Under the BUSINESS AND SELF-EMPLOYMENT INCOME heading, select the checkbox labelled Business or professional income and expenses (T2125/TP-80-V), and click Continue.

  2. On the T2125 (or T2125/TP-80-V) page, answer Yes to the following question: Do you need to make any capital cost allowance (CCA) claim for assets related to this business?

  3. In the CCA section, enter details related to the ZEV.

To claim enhanced CCA for the ZEV you used to earn employment income, follow these steps in H&R Block’s 2023 tax software:

  1. On the left navigation menu, under the Credits & deductions tab, click Tax Topics.

  2. Select the Employment expenses & other income checkbox.

  3. At the bottom of the page, click Add selected topics to my return.

  1. Under the EXPENSES heading, select the checkbox labelled Employment expenses then click Continue.

  2. On the Employment Expenses page, answer Yes to the question: Do you have motor vehicle expenses to claim?

  3. Return to the top of the page. Select Vehicle expenses from the green Go To Page dropdown menu.

  4. Answer Yes to the question: Do you want to claim capital cost allowance for this vehicle?
  5. Enter details related to the ZEV.