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: 185190
Dear [Client]:
Subject: EXCISE INTERPRETATION
Excise tax exemptions and refunds on diesel fuel
Thank you for your letter of May 31, 2017, concerning the application of the Excise Tax Act (ETA) provisions that relieve the excise tax imposed on diesel fuel when it is used in specific instances such as heating oil and to generate electricity.
All legislative references are to the ETA and the regulations therein, unless otherwise specified.
Questions:
We determined the questions from your letter are as follows:
1. Can a refund be claimed on diesel fuel used in compressors supplying electricity for multiple purposes?
2. Can a Federal Excise Tax (FET) refund be claimed on FET paid diesel fuel used as heating oil for the period of June 2015 to June 29, 2016?
General Information:
Paragraph 23.(8)(c) of the ETA states that the tax imposed under subsection (1) is not payable in the case of diesel fuel for use in the generation of electricity, unless the diesel fuel is used in or by a vehicle, including a conveyance attached to the vehicle, of any mode of transportation.
Paragraph 68.01(1)(b) of the ETA 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.” Refund applicants must be able to provide supporting documents showing the amount of diesel fuel used to generate the electricity.
Notice ETSL77, Budget 2016 – Restricting the Relief of Excise Tax on Diesel Fuel and Aviation Fuel, which explains the amendments in Budget 2016 on diesel and aviation fuel, states that; subparagraphs 68.01(1)(a)(i) and (ii) of the Act provides refund eligibility for vendors and purchasers of diesel fuel, both during and after the transitional period of March 23, 2016 to June 30, 2016.
In order for a vendor to be eligible for a refund, they must obtain a certificate of exemption from the purchaser that certifies that the diesel fuel is for use exclusively as heating oil before July 1, 2016 or exclusively for use after June 30, 2016, as heating oil within the meaning of the new definition. In addition, the vendor must reasonably believe that the purchaser will use the diesel fuel as certified by the purchaser. The use of such certificates has been a long-standing practice.
The Minister may pay a refund to the purchaser if no application for refund can be made by the vendor.
Paragraph 68.01(3) of the ETA states that no payment shall be made under this section unless
- (a) the vendor described in subparagraph (1)(a)(i) applies for it within two years after the vendor sells the diesel fuel to the purchaser described in paragraph (1)(a); or
- (b) the purchaser described in subparagraph (1)(a)(ii), paragraph (1)(b) or subsection (2) applies for it within two years after the purchase.
Responses to your questions:
1. A refund of the FET can be claimed on diesel fuel used in compressors operating as generators solely producing electricity used for multiple purposes, unless electricity is used in or by a vehicle, including a conveyance attached to the vehicle, of any mode of transportation.
2. Subsection 68(1) of the Excise Tax Act specifies that a FET refund will not be paid unless you file an application within two (2) years of the day on which the amount was paid. As well, ETSL 77 Budget 2016 – Restricting the Relief of Excise Tax on Diesel Fuel and Aviation Fuel, states that the ETA provides refund eligibility for vendors and purchasers of diesel fuel, both during and after the transitional period of March 23, 2016 to June 30, 2016.
The vendor must obtain a certificate of exemption from the purchaser that certifies that the diesel fuel is for use exclusively as heating oil before July 1, 2016 or exclusively for use after June 30, 2016, as heating oil within the meaning of the new definition.
In addition, the vendor must reasonably believe that the purchaser will use the diesel fuel as certified by the purchaser.
The Minister may pay a refund to the purchaser if no application for refund can be made by the vendor
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
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