BC Budget 2022 introduces major tax incentives for zero-emissions vehicles

On February 22, 2022, British Columbia Minister of Finance, Selina Robinson, tabled the 2022 Provincial Budget. This updated budget aims to improve people’s lives by continuing to invest in BC’s economic, environmental, and social strengths.

Notable announcements of interest to the automotive industry include two key proposed changes to the Provincial Sales Tax Act with regards to Zero-Emission Vehicles (ZEVs), and an extension of the CleanBC Go Electric vehicle rebate program.

Exemption for used zero-emission vehicles introduced

Effective February 23, 2022, used zero-emission vehicles are exempt from provincial sales tax (PST). The exemption applies to sales of all used zero-emission vehicles from motor dealers and private sales of used zero-emission vehicles that have been driven for at least 6,000 kilometres. The exemption is set to apply for five years, expiring on February 22, 2027, and is intended to encourage consumers to adopt ZEVs.

Passenger vehicle surtax threshold for zero-emission vehicles increased

Also effective February 23, 2022, the passenger vehicle surtax (luxury tax) threshold for zero-emission vehicles is increased to $75,000 from $55,000. The increased surtax threshold is scheduled to end on February 22, 2027. This change is intended to accommodate the typically higher capital cost of a ZEV versus a comparable internal combustion engine alternative. Previously, vehicles with a purchase price ranging between $55,000 and $55,999 paid an extra 1 percent PST, between $56,000 and $56,999 paid an extra 2 percent PST and any vehicles priced over $57,000 paid an extra 3 percent PST, for a total of 10 percent. With this new announcement, any ZEV priced below $75,000 will be exempt from the passenger vehicle surtax.

Go Electric Program to continue

Another notable announcement in Budget 2022 was a commitment of $79 million to continue the widely successful program. Go Electric provides for rebates of up to $3,000 for qualifying British Columbians on the purchase of a new battery electric vehicle or hydrogen fuel cell vehicle.

To learn more about how this announcement may impact you, contact Chris Schaufele, CPA, CA at 604.542.6768 or at [email protected].