Please note that the following document, although correct at the time of issue, may not represent the current position of the Canada Revenue Agency. / Veuillez prendre note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'Agence du revenu du Canada.
Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 11th floor
320 Queen Street
Ottawa ON K1A 0L5
[Addressee]
Case Number: 226231
Dear [Client]:
Subject: EXCISE INTERPRETATION
Eligibility for a rebate of the fuel charge on […][fuel] transferred into […][a unit] that is sold and exported out of Canada
Thank you for your letter dated [mm/dd/yyyy], concerning the application of the Greenhouse Gas Pollution Pricing Act (GGPPA) to the eligibility for a rebate of the fuel charge on […][fuel] transferred into […][a unit] that is sold and subsequently exported out of Canada. We apologize for the delay in our response.
All legislative references are to the GGPPA and the regulations therein, unless otherwise specified.
We understand the following information pertaining to your request:
[…][The Company] is registered as an emitter under Part 1 of the GGPPA and operates […][a facility in a listed province]. […]. Environment and Climate Change Canada (ECCC) has issued […] as follows:
[…]: Covered Facility Certificate [#] issued [mm/dd/yyyy]; […].
[The Company] purchases bulk volumes of [fuel] in […][a listed province] with the fuel charge embedded within the cost from a fuel wholesaler who is registered as a distributor. [The Company] does not issue an exemption certificate to their fuel supplier with respect to these purchases of [fuel]. The [fuel] is delivered by the fuel wholesaler to [the Company’s] covered facility […][in a listed province] where it is then stored and ultimately used as outlined below.
Each of the […][units sold by the Company] requires a set amount of [fuel] […]. The volume of [fuel] [per unit] is determined by the specifications of the [unit] and […]. Substantially all of the volume of [fuel] delivered […] is transferred into the […] [units]. Each [unit] is [used] […] prior to being sold, […]. [Fuel] is also used in the following manners […]: in […] trucks […] [at the] covered facility and in other [units] that […][leave the] covered facility.
A portion of the [units] […] are sold in Canada […]. The majority of [units] […] are sold to […][X] and are destined for a location outside Canada. [X] obtains legal title to the [units] that they purchase from [the Company] […][in a listed province] […]. The [units] are then exported out of Canada by [X], […]. Substantially all of the volume of [fuel] […] transferred into the [the units] […] remains in each of these [units] when they are exported out of the country.
INTERPRETATION REQUESTED
You would like to know the following:
1. Whether [the Company] is eligible for a rebate of the fuel charge paid on the volume of [fuel] transferred into the [unit] […] that is sold and exported out of Canada; and
2. Should [the Company] be determined to be ineligible for the rebate, would [X] be eligible for a rebate of the fuel charge paid on the volume of [fuel] transferred into the [unit] […] that [X] purchased from [the Company] and subsequently exported out of Canada.
INTERPRETATION GIVEN
A registered distributor in respect of a type of fuel is required to pay a charge pursuant to subsection 17(1) when fuel of that type is delivered to another person in a listed province. Accordingly, where a type of fuel is bought by a registered emitter (RE) without the use of an exemption certificate, the fuel charge is embedded within the cost of that fuel. This indirect payment of the fuel charge forms part of the cost basis of the fuel involved.
The requirements for obtaining a rebate for fuel removed from a listed province are outlined in subsection 43(1).
As per subsection 43(1), if at a particular time a person that is a registered emitter or is, in respect of that type of fuel, a registered user, a registered importer, registered air carrier, registered marine carrier or registered rail carrier removes a quantity of fuel of that type from a listed province, the Minister must pay to the person a rebate in respect of the quantity of fuel, the listed province and the reporting period of the person that includes the particular time if, at an earlier time in a particular reporting period,
* the person removed the quantity of fuel from a covered facility of the person in the listed province and a charge under subsection 22(1) or (2):
* became payable by the person at the earlier time in respect of the quantity of fuel and the listed province; and
* is taken into account in the determination of the net charge for the particular reporting period of the person; or
* the quantity of fuel was held by the person at, or the quantity of fuel was in transit to, a facility or property of the person in the listed province that ceased, at the earlier time, to be a covered facility of the person and a charge under subsection 22(6) or (7):
* became payable by the person at the earlier time in respect of the quantity of fuel and the listed province; and
* is taken into account in the determination of the net charge for the particular reporting period of the person.
Subsection 43(2) provides that the amount of the rebate under subsection (1) is equal to the amount of the charge referred to in whichever of paragraphs 43(1)(a) to (c) applies.
[The Company], who purchased fuel with the fuel charge embedded, would therefore not meet the requirements for a rebate under subsection 43(1) as it did not incur the charge in any manner indicated in paragraphs 43(1)(a) to (c).
Additionally, [X] would not meet the requirements for a rebate under subsection 43(1) as they have not incurred the fuel charge in any manner referred to in paragraphs 43(1)(a) to (c). Furthermore, [X] would also be required to hold at least one of the registrations necessary to claim a refund under subsection 43(1).
In accordance with the qualifications and guidelines set out in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service, the interpretation given in this letter, including any additional information, is not a ruling and does not bind the Canada Revenue Agency (CRA) with respect to a particular situation. Future changes to the Act, regulations, or the CRA’s interpretative policy could affect the interpretation or the additional information provided herein.
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 365-323-2614.
Yours truly,
Cameron Peebles
Rulings Officer, Fuel Charge Unit
Excise Duties and Taxes Division
Excise and GST/HST Rulings Directorate
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