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 Duties and Taxes Division
Place de Ville, Tower A, 11th Floor
320 Queen Street
Ottawa ON K1A 0L5
[Addressee]
Case Number: 179644
Dear [Client]:
Subject: EXCISE INTERPRETATION
[Application of Excise Tax to Diesel Fuel and Heating Oil]
Thank you for your letters […], concerning the application of the Excise Tax Act to diesel fuel and heating oil.
All legislative references are to the Excise Tax Act (Act) and the regulations therein, unless otherwise specified.
We understand the following information:
[…][The Company] is a supplier of fuel.
In one instance, [the Company] is supplying fuel to a customer who uses the fuel to heat its factory. The fuel is delivered and put into a single tank and used exclusively to heat the factory.
In a second instance, [the Company] is delivering fuel to a customer who uses it to “generate steam to provide heat to the building as well as to generate hot water for domestic use and various processing and plant clean up”. The fuel is also delivered into a single tank.
INTERPRETATION REQUESTED
You would like to know if excise tax applies to these two scenarios.
INTERPRETATION GIVEN
Based on the information provided, we offer the following information.
In the first instance where fuel in delivered to a customer and the fuel is used exclusively to heat the building, the fuel is deemed to be heating oil and is therefore not subject to excise tax.
In the second instance, where the fuel is delivered to a single tank and used for various purposes and not exclusively to heat a home, building or similar structure, the fuel is deemed to be diesel and is subject to excise tax and must be sold tax-paid.
Subsection 2(1) of the Act provides the following definition:
“diesel fuel includes any fuel oil that is suitable for use in internal combustion engines of the compression-ignition type, other than any such fuel oil that is intended for use and is actually used as heating oil”.
“heating oil means any fuel oil that is consumed exclusively for providing heat to a home, building or similar structure and that is not consumed for generating heat in an industrial process, including any commercial process that involves removing moisture from a good”.
In other words, unless the fuel is actually used exclusively to heat a home, building or similar structure, it is deemed to be diesel and is subject to excise tax.
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(s) given in this letter on the proposed amendment(s) to the type in relevant legislation, 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 these proposed amendments, if enacted, or to the CRA’s interpretative policy could affect the interpretation(s) 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 613-670-7207.
Yours truly,
Nathalie Robitaille
Excise Taxes and Other Levies
Excise Duties and Taxes Division
Excise and GST/HST Rulings Directorate
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