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: 185516
Dear [Client]:
Subject: EXCISE INTERPRETATION
Excise Tax on Kerosene
Thank you for your letter of June 28, 2017, concerning the application of the Excise Tax Act to the sale of kerosene sold for heating purposes.
All legislative references are to the Excise Tax Act and the regulations therein, unless otherwise specified.
[…][Company X] a licensed wholesaler, would like to sell kerosene without the excise tax to retailers who provide an affidavit that the kerosene will be sold for use as heating oil.
INTERPRETATION REQUESTED
You would like to know whether a licensed wholesaler can sell kerosene without the excise tax to a retailer that will use the kerosene as heating oil.
INTERPRETATION GIVEN
Diesel fuel under section 2(1) of the Excise Tax Act 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.
Kerosene falls under the ETA definition of diesel fuel and is subject to federal excise tax.
Heating oil defined in section 2(1) of the Excise Tax Act 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.
A vendor can sell heating oil without the excise tax. Where diesel fuel or kerosene is sold as heating oil and is indicated as such, it can be sold without the excise tax.
At the time of purchase, and in order to substantiate their purchase of heating oil without the excise tax, the purchaser should certify to the vendor with written certification that the fuel will be used exclusively as heating oil. The certification should read,
We hereby certify that this diesel fuel/fuel oil is for excise tax-excluded purposes provided in subsection 2(1) of the Excise Tax Act and is for use by us exclusively as heating oil
______________________________
Signature of Purchaser
Where a licenced vendor sells kerosene for a use other than as heating oil, the licenced vendor must report and remit the excise tax on their tax return.
Pursuant to subsection 23(9.1) of the Excise Tax Act, if fuel oil (kerosene/heating oil) is purchased without the excise tax and is subsequently sold or appropriated for purposes other than heating, the fuel oil would be considered diverted and subject to excise tax.
Based on the information provided, [Company X] can sell kerosene without the excise tax to a purchaser who certifies that the kerosene will be used as heating oil and where [Company X] reasonably believes that the purchaser will use the kerosene exclusively as heating oil to heat 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 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, 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(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 613-670-7206.
Yours truly,
Sharon Kendall
Excise Taxes and Other Levies Unit
Excise Duties and Taxes Division
Excise and GST/HST Rulings Directorate
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