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, 20th Floor
320 Queen Street
Ottawa ON K1A 0L5
[Addressee]
Case number: 149897
June 7, 2013
Dear [Client]:
Subject: EXCISE INTERPRETATION
[Excise tax on importation of biodiesel]
Thank you for your letter of [mm/dd/yyyy] concerning the application of the Excise Tax Act to biodiesel.
All legislative references are to the Excise Tax Act (ETA) and the regulations therein, unless otherwise specified.
We understand you are importing B100 biodiesel blend for blending in your [...]. This is further blended with [...] other products to form [...] treating oil that is [...][description of usage].
You also mentioned that once blended the product is no longer suitable for use in a diesel engine.
Interpretation Requested
You would like to know if you could import B100 biodiesel exempt of excise tax.
Interpretation Given
Based on the information provided, the biodiesel must be purchased or imported excise tax paid.
Subsection 23(1) of the ETA, subject to subsections (6) to (8), imposes excise tax on items listed in Schedule I to the ETA, at the rate specified in the Schedule. Section 9.1 of Schedule I specifies the rate of tax of $0.04 per litre for diesel and aviation fuel.
Subsection 2(1) of the ETA defines diesel fuel to include 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 and actually used as heating oil. As such, when diesel fuel is intended and actually used as heating oil, it will not be subject to the federal excise tax (FET).
As of April 1, 2008, the excise tax exemption on biodiesel has been lifted. In other words, biodiesel is now included in the definition of diesel fuel and is subject to excise tax unless it is intended and actually used as heating oil.
In your case, since the biodiesel is not being used for heating, it must be purchased by [...][the Company] on a federal excise tax-paid basis. Once the diesel is blended to the extent that it is no longer suitable for use in internal combustion engines of the compression-ignition type, the blended product is not subject to excise tax. However, there is no provision in the ETA that allows for a refund to [the Company] on the basis that the biodiesel has been blended with other products to render it non-motive.
The foregoing comments represent our general views with respect to the subject matter of your request. These comments are not rulings and, in accordance with the guidelines set out in GST/HST Memorandum 1.4, Goods and Services Tax Rulings, do not bind the Canada Revenue Agency with respect to a particular situation. Future changes to the Excise Tax Act, regulations, or our interpretative policy could affect this interpretation.
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 613-657-4138.
Yours truly,
Nathalie Robitaille
Excise Taxes and Other Levies
Excise Duties and Taxes Division
Excise and GST/HST Rulings Directorate
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