Zero-Emission Vehicles: Promised Investments & Incentives

Walter Harder

As part of the September 23, 2020 Speech from the Throne, the government committed to several goals concerning zero-emission vehicles. The intention is to improve affordability and encourage manufacturing of these products by cutting the corporate tax rate for those making zero-emission products by a proposed 50%.

Specifically, these goals include:

• Making zero-emission vehicles more affordable.
• Investing in more charging stations.
• Launching a new fund to attract investments in making zero-emission products, including the components of zero-emission vehicles, such as batteries.
• Cutting the corporate tax rate for corporations making zero-emission products.

Making Zero-Emission Vehicles More Affordable. This is not the first time we’ve heard from the government on this subject recently. The first step in this process began in March 2019 when it was announced that Capital Cost Allowance (CCA) rates for certain zero-emission vehicles would be 100% in the year that the vehicle was available for use.  This 100% write-off applies to vehicles available for use before the end of 2024, reducing to 75% in 2025 and 2026 and 55% in 2026 and 2027.  Effective May 1, 2019 such vehicles were also eligible for purchase and long-term lease incentives. In March 2020, the government announced that these incentives would be extended to off-road vehicles, although no legislation has been introduced to further that announcement.

So, what else could the government do to make zero-emission vehicles more affordable? Here are some options:

• Exempt zero-emission vehicles from GST/HST.
• Increase the price-range for zero-emission vehicles eligible for the purchase/lease incentive.
• On the negative side, making it more expensive to operate vehicles operating on fossil fuels, such as increasing the carbon tax rates

Investing in Charging Stations. In March 2020, the federal government announced that 837 EV fast chargers, 23 natural gas fuelling stations and 8 hydrogen refuelling stations were selected for funding under the Electric Vehicle and Alternative Fuel Infrastructure Deployment Initiative which was established in the 2016 and 2017 Federal Budgets.

New Fund to Attract Investments in Zero-Emission Products. In the 2018 Fall Economic Statement, the government announced $800 million dollars in funding under the Strategic Innovation Fund to support job-creating investments in zero-emission vehicle manufacturing in Canada.

Cutting Corporate Tax Rates for Corporations Making Zero-Emission Vehicles. The speech from the Throne indicates that the corporate tax rate would be cut in half for “these companies to create jobs and make Canada a world leader in clean technology.”

Additional educational resource: Join us at the Virtual Distinguished Advisor Conference, live online October 28-30 to hear from expert speakers about what’s ahead for the Canadian economy in the wake of the pandemic, and into the future. The theme being discussed is “Bold Thinking, Bright Insights”.

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