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.
Date March 19, 2014
To:
[Addressee]
From:
Nathalie Robitaille
Excise Taxes and Other Levies Unit
Legislative Policy and Regulatory Affairs Branch
Case Number: 144475
SUBJECT: EXCISE INTERPRETATION
Application of the Excise Tax Act on Stone Crushing Units
Thank you for your [correspondence] […] of [mm/dd/yyyy] concerning the application of the Excise Tax Act to mobile processing plants units (stone crushing units) […].
All legislative references are to the Excise Tax Act and the regulations therein, unless otherwise specified.
We understand that the units you referred to have the following properties:
1. Some of the units have heavy duty track drives which can be used to move around. Even though the units have the capacity to be self-propelled, in the case you referred to, the units are towed around.
2. The units are used to crush stones into aggregates.
3. The units can be used as stand-alone units or in combination with secondary and tertiary crushers and mobile screens.
4. You mentioned that some of the other units have tires and, in the case you refer to, are wheeled around the site; and they are not driven by any motor.
5. The electricity generated in not used to move the units but rather to operate the units.
You would like to know if the diesel used to generate electricity to operate the stone crushing units is exempt of excise tax.
Based on the information provided, the diesel used to generate electricity to operate the stone crushing units is not exempt of excise tax.
Paragraph 23(8)(c) of the ETA provides for an exemption of excise tax on diesel fuel for use in the generation of electricity, except where the electricity so generated is used primarily in the operation of a vehicle.
Paragraph 68.01(1)(b) provides for a refund of excise tax “to a purchaser who applies for the payment and who uses the diesel fuel to generate electricity, except if the electricity so generated is used primarily in the operation of a vehicle.”
According to the Excise Communiqué 191/TI of December 1989, “The word “vehicle”, […], has broad meaning referring to carriages and conveyances of all kinds which are used to carry or transport persons or goods, for example, ships, trucks, tractor-trailers, locomotives and railway rolling stock.” This policy is still valid and is published in our Policy Statement EP-003 and expands to include tugs, ferries, and airplanes.
The examples [in EP-003] illustrate that [a "vehicle"] [has] a concept of movement, but [the examples] make no distinction […] [between a] vehicle [that] is self-propelled, pushed or pulled.
Even though the stone crushing units are either towed or wheeled around, they still have the capacity to move or be moved around. The purpose of the unit is to crush large boulders and to move the resulting aggregate rock into either a pile or another unit for further movement or processing. Thus the stone crushing units meet the definition of a “vehicle”.
The term “operation of a vehicle” also has a broad meaning with respect to the overall functioning of the vehicle. While it includes the concept of motion, it also includes activities such as the running of engines and generators which generate electricity to heat, cool or light vehicles. The term, however, excludes the lighting, cooling and heating of passenger areas of vehicles recognized for public transportation, such as seating areas, sleeping compartments, dining areas and lounges; in other words that which is meant to provide what is generally regarded as “hotel service”.
Consequently, electricity generated to crush stones would not be considered hotel services and would therefore be generated to operate the unit.
Therefore, a refund on excise tax for diesel used in the generation of electricity would not be available since the mobile rock-crushing unit would be considered to be a vehicle and the electricity generated by the diesel engine on the unit is used primarily in the operation of the vehicle.
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 613-957-4138.
Yours truly,
Nathalie Robitaille
Excise Taxes and Other Levies
Email this Content