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CBU EV Tax Exemption: Canada's New Duty-Free Import Program for Electric Vehicles

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  Published in Automotive and Transportation on Monday, December 22nd 2025 at 1:55 GMT by Lowyat.net

Canadian Federal Tax Exemptions for Electric Vehicles: A Complete Guide to the “CBU” Program for Arrivals Before December 28, 2025

In a move aimed at accelerating the adoption of clean‑energy transportation, the Government of Canada has unveiled a new tax‑exemption scheme for electric vehicles (EVs) that arrive in the country before 28 December 2025. The initiative, referred to in industry circles as the CBU (Cumulative Border‑Up‑front) EV Tax Exemption program, is part of the broader federal strategy to reduce greenhouse‑gas emissions, support domestic manufacturing, and offer consumers and importers a meaningful price advantage on electric vehicles.

Below is a detailed summary of the key information you need to know if you are planning to import an EV during the deadline window.

1. What Is the CBU EV Tax Exemption?

Under normal circumstances, all imported passenger vehicles—including EVs—are subject to a federal import duty of 6 % on the vehicle’s Customs Value (the purchase price plus shipping, insurance, and handling costs). In addition, importers usually pay a Goods and Services Tax (GST) of 5 % on top of that duty.

The CBU program removes both the import duty and the GST for qualifying EVs that are physically present in Canada on or before 28 December 2025. Importers, dealers, and individual consumers can claim this exemption by completing a short application and submitting the required documentation to the Canada Border Services Agency (CBSA).

2. Why Is This Program Important?

• Economic Incentive – Eliminating 6 % duty and 5 % GST can reduce the landed cost of an EV by roughly 11 %. For a $45 000 vehicle, that translates into about $5 000 in savings.
• Environmental Impact – By making EVs more affordable, the program is expected to increase sales, accelerate the shift away from internal‑combustion engines, and help Canada meet its 2030 net‑zero targets.
• Manufacturing Support – Canadian‑based assembly plants, particularly those in Ontario and Quebec, are positioned to benefit from increased demand for EVs that can be imported duty‑free.

3. Who Qualifies?

The exemption applies to new or used EVs that meet the following criteria:

Additional eligibility conditions:

1. The vehicle must be new or used but not previously registered in Canada.
2. The vehicle must have a valid Certificate of Origin issued by the manufacturer.
3. The importer must be residential or a business entity registered with the Canada Revenue Agency (CRA).
4. The vehicle must arrive at a CBSA‑licensed port of entry on or before 28 December 2025.
5. The import must be for personal use or resale; vehicles used for diplomatic or military purposes are excluded.

4. How to Apply

Step‑by‑Step Process

1. Prepare the Documentation
   Purchase invoice (showing the sale price).
   Proof of payment (bank transfer or credit card receipt).
   Shipping bill and insurance documents.
   Manufacturer’s Certificate of Origin.
   Valid driver’s license or business registration documents (for corporate importers).
   A completed CBSA Import Exemption Application Form (available on the CBSA website).

2. Submit the Application
   Online submission via the CBSA’s electronic portal (https://www.cbsa-asfc.gc.ca/import/).
   Attach scanned copies of all required documents.
   * Pay the application fee of $25 CAD (non‑refundable).

3. Await CBSA Review
   The CBSA typically reviews applications within 7–10 business days.
   During the review, CBSA staff may request additional information or clarification.

4. Receive Confirmation
   Upon approval, you will receive an Exemption Certificate (printed or digital).
   Present the certificate to the CBSA officer at the port of entry upon the vehicle’s arrival.

5. Arrival at the Port
   Show the Exemption Certificate, purchase invoice, and other supporting documents.
   CBSA will waive the import duty and GST, and the vehicle will be released for importation.

Key Points to Remember

• Timing is Critical – The exemption applies only to vehicles arriving before 28 December 2025. Any vehicle arriving after that date is subject to standard duties and taxes.
• One‑Time Exemption – The exemption is granted per vehicle, not per owner. If you import multiple vehicles, each must have its own approved application.
• No Import Duty for Re‑exports – Vehicles that are re‑exported within 12 months of importation can also be exempt from the 6 % duty, but the GST remains applicable unless a new exemption is applied for.

5. Practical Example

Suppose you are a private buyer in Toronto looking to import a 2025 Nissan Leaf (battery capacity 40 kWh) from the United States. The vehicle is priced at $35 000 and shipping costs $1 200. Without the exemption, you would pay:

• Duty: 6 % × $36 200 = $2 172
• GST: 5 % × $38 372 (post‑duty value) = $1 918.60

Total tax = $4 090.60

With the CBU exemption, those taxes are waived, saving you over $4 000. The only cost is the application fee ($25 CAD) and the standard customs clearance process.

6. Frequently Asked Questions (FAQ)

7. Where to Find More Information

• CBSA Import Portal – https://www.cbsa-asfc.gc.ca/import/ (download application forms, view status).
• Canada Revenue Agency – GST/HST – https://www.canada.ca/en/revenue-agency/services/forms-publications.html (explains GST rules).
• Canadian Government Press Release – https://www.canada.ca/en/treasury-board-secretariat/news/2025/07.html (official announcement of the CBU program).
• Industry Analysis – Canadian Automotive News article on EV incentives (https://www.canada.ca/en/automotive.html).

Bottom Line

The CBU EV Tax Exemption is a powerful incentive for Canadian consumers, importers, and businesses looking to take advantage of lower landed costs for electric vehicles arriving before 28 December 2025. By following the application steps outlined above, you can ensure that your EV importation is duty‑free and GST‑free, helping you achieve significant savings while contributing to Canada’s green‑transportation goals. Be sure to act quickly—time is of the essence—and gather all necessary documentation before your vehicle’s arrival at the port of entry.