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
Case Number: 186002
Dear [Client]:
SUBJECT: EXCISE INTERPRETATION
[…][Refund eligibility of the Federal Excise Tax on diesel fuel]
Thank you for your letter of July 17, 2017, concerning the application of paragraph 68.01(1)(b) of the ETA following the budget tabled March 22, 2016, proposing measures restricting the relief of the Federal Excise Tax (FET) on diesel and aviation fuel which came into force July 1, 2016.
All legislative references are to the ETA and the regulations therein, unless otherwise specified.
INTERPRETATION REQUESTED
The […] [incoming] letter states, “Currently refunds applied for are approved, if a separate fuel tank is used for the vehicle and the attached generator conveyance. Refunds are disallowed after June 30, 2016 if a common fuel tank is used to supply fuel.” Specific questions of […] concern cases where portable welders mounted on vehicles, are used to weld and power electrical tools, and where portable generators mounted on vehicles, are used to power electrical tools and power auxiliary lighting. These questions are:
Is it the end use of the diesel fuel that determines the refund eligibility of the FET on fuel or the ability to measure it?
Both the portable welder and the generator example are mounted to the vehicle. Under the ETA, are these types of electrical generation units a “conveyance attached to a vehicle”, therefore are they ineligible for the FET refund?
INTERPRETATION GIVEN:
The end use of the fuel determines the FET refund eligibility of diesel fuel.
Portable generators or welder generators;
When placed on or mounted to a vehicle or conveyance are not considered to be part of the conveyance or vehicle if the generator or welder generator can operate independently of the vehicle. Fuel used in the generators and welder generators would generally be eligible for FET refund.
When the generators or welder generators are not able to operate independently of the vehicle such as in instances where the generators or welder generators fuel is directly supplied from the vehicles fuel tank the generators or welder generators would be considered part of the vehicle or conveyance and fuel used in the generators or welder generators would not be eligible for FET refund.
EXPLANATIONS:
Paragraph 68.01(1)(b) authorizes a refund of the Federal Excise Tax (FET) to a purchaser who applies for the payment and who uses the diesel fuel to generate electricity, unless the diesel fuel is used in or by a vehicle, including a conveyance attached to the vehicle, of any mode of transportation.
The terms “vehicle” and "conveyance" are not defined in the ETA, therefore it is necessary to use the common, ordinary meaning. The Canada Revenue Agencies (CRA) position is that a vehicle means; carriages or conveyances of all kinds, which are used to carry or transport persons and/or goods. A "conveyance" is a means of transporting or carrying. Some examples of vehicles include, but are not limited to; airplanes, boats, buses, ferries, forklifts, self-propelled barges, ships, locomotives, railway rolling stock, trucks and tractor-trailers.
The CRA considers that when fuel is placed in the fuel tank of a vehicle the end use has taken place and the fuel has been used in a vehicle.
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 7208.
Yours truly,
Michael Ryder
Rulings Officer, Excise Taxes and Other Levies
Excise and GST/HST Rulings directorate
Legislative Policy and Regulatory Affairs Branch
Email this Content