We know that the higher upfront purchase cost of zero-emission vehicles (ZEVs) can make it more difficult to adopt this clean technology. The Incentives for Zero-Emission Vehicles (iZEV) Program and tax write-offs for businesses are helping to make it more affordable.
Purchase And Lease Incentives
The iZEV Program offers point-of-sale incentives for consumers (subject to funding availability) who buy or lease a ZEV vehicle. Only the vehicles listed on the website below are eligible for an incentive when they’re purchased or leased for at least 12 months, on or after the eligibility date.
Find which vehicles are eligible for an incentive, or a vehicle’s eligibility date
Before including a car on the list of eligible vehicles, Transport Canada has reviewed an application from the automaker and has found that the vehicle meets the iZEV Program requirements. Namely, that the vehicle is:
- a passenger car, where the base model Manufacturer’s Suggested Retail Price (MSRP) is less than $55,000; and
- higher-priced trims of these vehicles, up to a maximum MSRP of $65,000, will also be eligible for purchase incentives;
or
- a station wagon, pickup truck (light truck), sport utility vehicle (SUV), minivan, van, or special purpose vehicle, where the base model Manufacturer’s Suggested Retail Price (MSRP) is less than $60,000; and
- higher-priced trims of these vehicles, up to a maximum MSRP of $70,000, will also be eligible for purchase incentives.
Types Of Incentives
There are two levels of incentives:
- Battery-electric, hydrogen fuel cell, and longer-range plug-in hybrid vehicles are eligible for up to $5,000;
- longer range plug-in vehicles have an electric range equal to or greater than 50 km.
- Shorter range plug-in hybrid electric vehicles are eligible for up to $2,500;
- shorter-range plug-in vehicles have an electric range under 50 km.
Eligible Vehicles
To be eligible under the iZEV Program, a vehicle must:
- meet all of Canada’s Motor Vehicle Safety Standards;
- be meant for use on public streets, roads, and highways; and
- have at least four functioning wheels and be able to drive on a highway (in other words, not a low-speed vehicle)
Only new ZEVs are eligible for the federal incentive (in other words, vehicles that haven’t been plated before). Eligible ZEVs that are demonstrators (demo vehicles that buyers can test drive) are considered new vehicles and are eligible for the incentive as long as the odometer reads less than 10,000 km.
Incentives can be applied to eligible ZEVs leased for at least 12 months but will be prorated (adjusted) based on the length of a lease of less than 48 months. For example, a 48-month lease is eligible for the full incentive, while a vehicle with a 24-month lease will be eligible for half the incentive.
Vehicles are still eligible for the incentive even if delivery, freight and other fees (like vehicle colour, add-on accessories (e.g., a roof rack), options, and packages) push the actual purchase price over these set limits. As long as a vehicle (the year, make, model, and trim) appears on the list of eligible vehicles, an incentive can be provided. A “trim” is a preset package of equipment and finishes offered for a particular vehicle model (for example base, sport, touring, etc.). A vehicle model can have multiple trim levels. Different trim levels will usually have different prices.
There is a limit to how many eligible ZEVs Canadians can purchase or lease under the iZEV Program. Individuals are eligible for one incentive under this Program in a calendar year. Businesses and provincial/territorial and municipal governments operating fleets are eligible for up to 10 incentives under this Program in a calendar year.
Important: Transport Canada reserves the right to remove vehicles from the eligibility list if they no longer comply with program requirements.
How To Receive The Incentive
The incentive will be applied at the point of sale by the dealership. It will appear directly on the bill of sale or lease agreement on eligible ZEVs on, or after, the eligibility date. The dealer must apply taxes and fees to the purchase or lease before applying the incentive.
The dealer must submit the documentation required to be reimbursed for an incentive provided to consumers at the point of sale.
The federal incentive for eligible ZEVs will be applied to any provincial or territorial incentive offered.
Tax Write-Offs For Businesses
Budget 2019 provided for a tax write-off for zero-emission vehicles to support business adoption.
Businesses that receive an incentive from the federal iZEV Program can’t use the tax write-off for ZEVs. Businesses can only use one or the other.
For more information on the tax write-off for these vehicles, businesses and self-employed people can contact the Canada Revenue Agency at 1-800-959-5525.
Source of content: Government of Canada’s Website
What Are The Benefits Of Donating Personally?
For individuals, eligible donations made provided a non-refundable tax credit, reducing any personal income taxes owed. Unused donations can be carried forward up to a maximum of five years, so if an individual made a donation in 2017 but has no taxes owing, they can claim the donation tax credit to reduce their taxes in a tax year up to 2022. In Ontario, an individual will realize tax savings of $20.50 for every $100 of donations on the first $200 of charitable donations made. For every $100 of donations made over $200, the tax savings can be as high as $50.41.
What Are The Benefits Of Donating Through A Corporation?
For corporations, donations also result in tax savings, albeit in the form of a deduction from income, rather than a credit. Similar to individuals, unused charitable contributions may be carried forward for up to five years. The charitable donation deduction will reduce corporate taxes by $13.50 on the first $100 of donations made when taxable income is less than $500,000 in the corporation and by $26.50 when taxable income is greater than $500,000 in the corporation.
At first glance, the benefit of donating personally may result in greater tax savings; however, upon closer examination that is not always the case.
So Which Is Better, Personally Or Through A Corporation?
Let’s say you are an individual that falls within the highest personal income tax bracket, you have already made more than $200 of donations personally during the year and you want to make an additional charitable donation. You have $1,000 of pre-tax income in your corporation and are wondering whether it makes sense to donate directly through the corporation or to take the money out of the corporation via an additional salary or a bonus. After the corporation pays its corporate tax, it would have $865 available to donate. The corporate-made donation would result in corporate tax savings of roughly $117, resulting in a net tax cost of $18 to make the charitable contribution. If instead, you decided to withdraw the money and make the donation personally, after paying the personal income tax, you would have $465 available to donate. After claiming the charitable donation tax credit, the net tax cost of donating would be approximately $301 – significantly more than if the donation is made through the corporation. Additionally, the charity would be far better off if the donation was made through the corporation than if it was made personally ($865 received versus $465). See the analysis below:
In another example, let’s say that you want to make a $1,000 charitable donation and there is $1,000 in the corporation. In this case, if the donation was made directly from the corporation, the corporation would pay no corporate tax and the charity would receive $1,000. If instead, you pulled the money out of the corporation by way of additional salary or a bonus and then made a $1,000 donation, the donation tax credit would not fully offset the personal income tax owing on the additional salary or bonus and there would be a net shortfall of roughly $31 required to cover the personal income taxes. See the analysis below:
Individuals outside the top marginal personal income tax bracket may get different results. If a person has $150,000 of taxable income, they are slightly better off making the $1,000 donation personally. See the analysis below:
The general rule of thumb is that if an individual expects to have more than $206,000 of taxable income personally in 2018, it makes sense from a tax perspective to donate directly through the corporation. If not, then the donation should be made personally. This threshold amount changes every year, so you should check in with your tax advisor annually.