Please note that the following document, although correct at the time of issue, may not represent the current position of the Agency. / Veuillez prendre note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'Agence.
Excise Duties and Taxes Division
Place de Ville, Tower A, 20th floor
320 Queen Street
Ottawa, ON K1A 0L5
XXXXX
XXXXX
XXXXX
Case Number: 112659
Attention: XXXXX
XXXXX
April 30, 2009
Subject:
EXCISE INTERPRETATION
Importation of Fuel into Canada
Dear Mr. XXXXX:
Thank you for your XXXXX of XXXXX forwarded to us by XXXXX concerning the application of the Excise Tax Act (ETA) to the importation of fuel.
All legislative references are to the ETA and the regulations therein, unless otherwise specified.
Statement of Facts
We understand that:
(1) US Company (US Co) has a supply of jet fuel which it would like to import into Canada;
(2) US Co. is a non-resident company;
(3) US Co. is not registered with the CRA, ie. no Business Number (BN) issued;
(4) Canadian Subsidiary (CS) of the US Co. is the purchaser of the fuel (resident company);
(5) CS is registered as a manufacturer for Excise Tax and GST;
(6) Fuel would be loaded in rail cars in the USA for direct shipment to a delivery point in Canada (AB); and
(7) Title to the fuel may change from US Co. to CS at any point as required by the Excise Tax Act.
Under an alternate scenario, US Co. secures a BN as a Non-Registered Importer (NRI).
Interpretation Requested
You would like to know:
1. If the US Co can act as the importer of record under the Excise Tax Act;
2. If the US Co. cannot act as the importer of record, is title to the fuel required to change in the USA; and
3. If CS can act as the importer of record without taking title to the fuel, i.e. CS retains the tax liability and reporting requirements for importation although a direct shipment is made from US Co to a third party customer in Canada.
Under the alternate scenario, you would like to know if the US Co. acts as the importer of record for a direct shipment to CS, does CS retain the obligation as a manufacturer to remit the fuel Excise Tax.
Interpretation Given
Based on the information provided under the first scenario, our response to your questions is as follows:
1. The US Co. may act as the importer of record under the ETA and is required to pay the Federal Excise Tax (FET) at the border. The importer of record is the party responsible for the importation and as such is legally liable for the payment of duties, taxes and fees and compliance with customs and other government agency regulations pertaining to the importation.
Pursuant to subsection 23(2) of the ETA:
"Where goods are imported, the excise tax imposed by subsection (1) shall be paid in accordance with the provisions of the Customs Act by the importer, owner or other person liable to pay duties under that Act, ..."
2. If the US Co. is not acting as the importer of record, the title to the fuel must change outside Canada.
3. CS may act as the importer of record without taking title to the fuel. Since CS is a licensed manufacturer, they will only be eligible to import aviation fuel exempt of excise tax, for resale, if they maintain a similar goods authorization under section 48 of the ETA. Should a section 48 similar goods authorization not exist, CS will be required to pay excise tax at the time of importation.
Where CS is required to pay excise tax on the importation, it will be eligible to file for a refund of the excise tax if the resale of the aviation fuel, to a third party, is made under tax-exempt conditions such as Ships' Stores. Where the resale of the aviation fuel is made under taxable conditions, no further accounting of excise tax is required.
If CS is eligible to import fuel exempt of excise tax, they will only be required to remit excise tax where the resale of the aviation fuel is made under taxable conditions. If the resale is made under tax-exempt conditions, no further accounting of excise tax is required.
Under the alternate scenario presented, the US Co. would act as the importer of record for direct shipments to the CS upon obtaining a BN in Canada and becoming a non-resident importer. The US Co. would be responsible for the payment of all duties and taxes to the Canada Border Services Agency (CBSA) and for the accuracy of information provided regarding the importation. In this scenario, the CS would not be responsible for remitting the FET on the fuel as they would be purchasing it tax paid.
You may also be interested in reviewing GST/HST Policy Statement P-125R entitled "Input Tax Credit Entitlement for Tax on Imported Goods" issued by the CRA on June 1, 2007 prior to determining who will be the importer of the fuel. This publication is available on the CRA website at http://www.cra-arc.gc.ca/E/pub/gl/p-125/p-125-e.html.
The foregoing comments represent our general views with respect to the subject matter of your request. These comments are not rulings and, in accordance with the guidelines set out in GST/HST Memorandum 1.4, Goods and Services Tax Rulings, do not bind the Canada Revenue Agency with respect to a particular situation. Future changes to the Excise Tax Act and its regulations, or our interpretative policy could affect this interpretation.
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at (613) 954-4132.
Yours truly,
Joan Thompson
Rulings Officer
Excise Taxes and Other Levies
UNCLASSIFIED
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