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Many drivers have begun to lessen their carbon footprint in recent years by acquiring more ecologically friendly automobiles, such as electric and hybrid vehicles. After all, not only does it reduce greenhouse gas emissions in the atmosphere, but it also has a variety of financial advantages, such as federal and provincial tax credits.
The only problem is that many zero-emission vehicles (ZEVs) are more expensive than traditional gas-guzzlers, which may make you wonder if the tax breaks are worth the extra money. Continue reading to learn more.
What Is The Hybrid and Electric Car Tax Credit?
Transportation emissions account for around 25% of Canada’s greenhouse gas emissions, according to the federal government. Zero-emission vehicles currently account for only 2% of all consumer vehicles in the country. Unfortunately, many drivers are still hesitant to purchase a ZEV due to the limited number of public charging stations available around the country, the fact that they like their present car or the fact that they simply cannot afford one.
As a result, the federal government is currently offering various tax benefits to individuals and organisations who purchase or lease specific types of battery-electric, plug-in hybrid electric, and hydrogen fuel-cell vehicles in an effort to slow climate change. With the correct criteria, you can even combine your federal rebate(s) with any provincial incentives offered in British Columbia and Quebec.
If your car qualifies for one of the federal or provincial ZEV incentive programmes, you can utilise your rebate(s) to lower the amount of tax you owe on your taxable income (a tax rebate is also commonly known as a tax credit).
Which Vehicles Qualify For ZEV Tax Rebates?
Keep in mind that in order to qualify for the federal ZEV tax rebates, you must own or lease particular types of vehicles. The following are some of the most important requirements:
- On or after May 1st, 2019, you must have purchased or begun leasing a new ZEV (your car cannot be preowned for a federal rebate).
- The basic model’s Manufacturer’s Suggested Retail Price (MSRP) must be less than $45,000 if the car has 6 or fewer seats.
- A car with 6 or fewer seats and an MSRP of less than $55,000 may still be eligible for purchase rebates, but only for purchase rebates (no leases).
- If the vehicle has seven or more seats, the base model must cost less than $55,000.
- Purchase incentives are also available for vehicles with 7 seats or more and an MSRP of less than $60,000.
Although the exact terms of Canada’s government ZEV tax refund programme might vary from year to year, the following are some of the most popular vehicles that qualify:
Hybrid Vehicles Plug-in
- e-Tron Audi A3
- The Chevrolet Volt is a plug-in hybrid vehicle.
- Fusion Energi is a hybrid Ford Fusion.
- PHEV Honda Clarity
- PHEV Hyundai Ioniq
- Kia Niro Plug-in Hybrid
- Toyota Prius Prime
- The Chevrolet Bolt by Chevrolet
- Ford Focus EV (Electric Vehicle)
- Hyundai Konda Electric manufactured by Hyundai.
- Kia Electric Soul
- Nissan Leaf is a plug-in hybrid electric vehicle
- Model 3 (Tesla) (Standard Range)
- The Volkswagen e-Golf
These are just a few of the zero-emission vehicles that are now qualified for the Federal iZEV Tax Incentive Program as of May 1, 2019. Other vehicles have been added to the list since then, so check the Government of Canada website to see whether your hybrid or electric vehicle qualifies.
Furthermore, the tax rebate conditions and qualifying automobiles in British Columbia and Quebec may differ slightly from those in the federal programme.
If you buy or lease a pre-owned vehicle in Quebec, for example, you may be eligible for a rebate of up to $4,000, which may not be a possibility in BC. In contrast, the SCRAP-IT Program in British Columbia allows you to get up to $6,000 in rebates by trading in your used fossil-fuel vehicle for an electric or hybrid vehicle.
Is It Worth It To Take Advantage Of The Federal Or Provincial ZEV Tax Rebates?
Now for the big question: are the federal and/or provincial tax breaks for electric and hybrid vehicles worth the high upfront costs? The answer, like with any vehicle-related quandary, is dependent on your lifestyle and driving habits.
Don’t forget to consider the following variables when purchasing or leasing a new or used ZEV in the hopes of receiving a tax rebate:
Style of Traveling
Some ZEVs can help you save money on gas, especially if you go totally electric and make short journeys to the city, work, or the grocery store on a regular basis. However, because there are so few public charging stations in Canada, electric automobiles may not be the best option for long-distance travel. If you’re concerned about this, a hybrid might be a better option.
New or Used ZEV
Remember that in order to qualify for a federal or provincial tax credit, you must buy or lease a new ZEV if you live anywhere other than Quebec, which may be out of reach for the average motorist. Even then, only certain second-hand autos qualify for QC. Some brands, including Kia and Mitsubishi, may not be eligible if they were built in the United States after January 1, 2020.
Simply, zero-emissions automobiles are costly, and many drivers are motivated by the overall price. When considering if the cost of a ZEV vehicle is worthwhile, consider the initial price, any tax refunds you may be eligible for, the monthly cost of fuel or the yearly charge cost (estimated at $400 by experts).
The cost and tax benefits of a ZEV can also differ depending on which vehicle you buy or lease. If you use gas sometimes, for example, hybrids may be more expensive to fuel than electric ones. While a standard automobile may be less expensive at first, fuel costs more in the long term. Furthermore, only plug-in hybrids qualify for federal or provincial tax credits.
Zero-emission automobiles are currently more valuable and expensive than conventional gasoline-powered vehicles. As a result, if you buy or lease a hybrid or electric automobile, your monthly or annual insurance rate will almost certainly be higher. If you are under or over a specific age, if you buy or lease a newer or more expensive model, or if you have a bad driving record, your premium may go up.
Stations for Charging
There are around 5,800–6,000 public charging stations in Canada as of 2019, which is a small amount compared to the number of typical gas stations. A ZEV may not be the most convenient or worthwhile option unless you plan to buy a long-range vehicle or install a private charger at your house or workplace.
Limits on Tax Refunds
Most federal and provincial tax rebates currently last up to three years. As a result, if you purchased your ZEV in May 2019, you will be eligible for incentives until May 2022. However, because the government of Canada has seen a surge in demand for both ZEVs and the tax rebates that go along with them, rebate programmes may be extended in the future.
Features, Repairs, and the Impact on the Environment
The more features you desire in your ZEV, the more expensive it will be, both in terms of price and insurance. A fully electric automobile is usually more expensive than a hybrid base model. In addition, because fewer mechanics are familiar with ZEVs, maintenance costs may be greater. The fact that you’ll be leaving a smaller carbon imprint, on the other hand, may be worth the extra cost.
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