The Government of Canada has introduced a temporary enhanced first-year capital cost allowance (CCA) rate of 100% in respect of eligible zero-emission vehicles (ZEVs) and equipment. Businesses will initially be able to access a 100% write-off for eligible ZEV vehicles which are (i) automotive (i.e., self-propelled) and; (ii) fully electric or powered by hydrogen. These rates will apply to eligible zero-emission automotive equipment and vehicles that are acquired on or after March 2, 2020, and that become available to use before 2028. A taxpayer would be able to claim the enhanced allowance only for the taxation year in which the vehicle first becomes available for use.

This enhanced CCA rate is a new addition to the enhanced rates already provided by the government under Budget 2019 for vehicles to be used on highways and streets. This new additional rate will apply for motor vehicles intended for use off-road. The new rate is part of the government's push for ZEV vehicles in all matters of transport, as described in the January 2020 blog post, Canada's Cabinet Mandate Letters Highlight Focus on Zero-Emission Vehicles.