Canada: Expanded first-year capital cost allowance for zero-emission vehicles

Canada: Expanded first-year capital cost allowance

Draft legislation would expand the temporary first-year capital cost allowance rate of 100% to cover more qualifying zero-emission vehicles and equipment to include a broader range of eligible automotive equipment and vehicles.

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The enhanced rate would apply to qualifying used and off-road automotive vehicles and equipment that do not currently benefit from the enhanced capital cost allowance rate. The 100% rate would gradually phase out for vehicles and equipment that become available for use after 2023, until it eventually expires in 2028. Taxpayers would only be able to claim the enhanced allowance for the tax year in which a qualifying vehicle is first available for use.

The draft measures were published on 15 December 2020, and are to be effective retroactively as of 2 March 2020 (the date Finance first announced that it would expand the enhanced capital cost allowance to qualifying off-road automotive equipment and vehicles).

Read a December 2020 report prepared by the KPMG member firm in Canada

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