New depreciation categories for tax purposes (Canada)

NOTE: It is not possible to benefit from both the federal subsidy AND the new depreciation categories. It is up to the organization or the company to decide which program is the most beneficial.

Class 54 for motor vehicles and passenger vehicles

This category is used for plug-in vehicles that would otherwise fall into categories 10 or 10.1. The CCA rate for this category is still 30%, but a higher deduction (up to a maximum of 100%) can be applied in the first year:

• 100% rate after March 18, 2019 and before 2024;
• Rate of 75% after 2023 and before 2026;
• Rate of 55% after 2026 and before 2028;

Capital costs are deductible up to a maximum of $ 55,000 plus sales taxes (instead of $ 30,000 for class 10.1 “passenger cars”). The limit and the rules could be revised annually.

Special rules must be observed for the application of the prescribed CCA rate of 30%.

Category 55 for rental vehicles, taxis as well as heavy goods vehicles and tractors intended for the transport of goods

This category is used for ZEVs that would otherwise be in category 16. The CCA rate for this category is 40%, but a higher deduction (up to a maximum of 100%) can be applied in the first year (as for category 54).

Capital costs are deductible up to a maximum of $ 55,000 plus sales taxes. The limit and the rules could be revised annually.

Special rules must be observed for the application of the prescribed rate of CCA of 40%.

For more information on capital cost allowance for a plug-in vehicle, please visit the Government of Canada site.