2019 Federal Budget Includes Rebate for Electric Vehicles

Starting in fiscal year 2019-20, the government will provide Transport Canada with $300 million to administer the program.

Matthew Guy By: Matthew Guy March 20, 2019
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Please note that the Canadian Government has now released additional details about the new EV incentive program and it includes a greater range of eligible vehicles. For all the details click here.

 

Wearing a freshly soled pair of shoes, Canadian Finance Minister, Bill Morneau, announced yesterday that the federal government will be introducing a purchasing incentive of up to $5,000 for electric battery or hydrogen fuel cell vehicles. The catch? They must have a manufacturer’s suggested retail price of less than $45,000.

Starting in fiscal year 2019-20, the government will provide Transport Canada with $300 million to administer the program. Some back-of-napkin math reveals this sum is good for 60,000 credits. For context, the all-electric Chevrolet Bolt EV – a machine which just squeaks under the wire with a base price of $44,800 – sold about 2000 copies in this country during each of its first two years on sale.

All signs point to these rebates being allowed to be stacked atop any provincial incentives, such as the program in Quebec which offers up to $8000 on all-electric vehicles with a price tag under $75,000. Combined, this would bring the sticker of a new Chevy Bolt EV down to just over thirty grand.

If customers start flocking to dealerships en masse to buy EVs, the current network of charging stations could be taxed beyond capacity. To address this, the government also proposes to build on previous investments by providing Natural Resources Canada with $130 million over five years. Starting in 2019–20, that cash will be used to deploy new recharging and refuelling stations in workplaces, public parking spots, and remote locations.

To further support businesses’ adoption of zero-emission vehicles, the budget proposes certain zero-emission vehicles (ZEVs) be eligible for a full tax write-off in the year they are put in use. Qualifying vehicles will include electric battery, plug-in hybrid (with a battery capacity of at least 15 kWh) or hydrogen fuel cell vehicles. This includes light-, medium- and heavy-duty vehicles purchased by a business and is a bigger deal than it may first seem.

Here’s an example. If a sales rep employed as an independent contractor buys a $48,000 ZEV, they’ll be able to deduct the entire purchase price the first year it is in use. That would reduce the federal/provincial income taxes and GST/HST in that year by about $13,000. Similarly, if a company buys a fleet of ZEVs for a million bucks, they’ll be able to deduct the whole amount, a sum nearly double than under the existing rules.

Opponents of the deal might think it hertz the federal budget, getting amped up at ohm after hearing this current announcement which is meant to keep the industry grounded. Further details – but no further bad puns – about the program will be released later this year.

Please note that the Canadian Government has now released additional details about the new EV incentive program and it includes a greater range of eligible vehicles. For all the details click here.

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