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 April 22, 2013
FROM Neil Varan
Technical Policy Advisor
Excise Taxes and Other Levies
Place de Ville, Tower A, 20-59
TO [Addressee]
Case Number: 151462
SUBJECT : EXCISE INTERPRETATION
FET End-User Refund under 68.01(2)
Thank you for your [correspondence] of [mm/dd/yyyy], concerning the application of Subsection 68.01(2) of the Excise Tax Act to end-users of fuel used as Ships' Stores. In it, you sought clarification as to who should apply for and is entitled to a refund of federal excise tax paid in the following situation:
1. An N-15 refund claim has been filed on behalf of [...][the Corporation] under the Ships' Stores refund provisions of the ETA.
2. The majority of the claim relates to [the Corporation]'s aircraft charter agreement with [...][Company X], who purchases the fuel for the planes, while [the Corporation] provides the flight service.
3. The contract states that [Company X] will be responsible for buying the fuel used in the aircrafts, and [the Corporation] never invoices [Company X] for the fuel costs.
4. You state that this does not meet the legislative requirement of Subsection 68.01(2).
5. You ask whether CRA can pay the claim to [the Corporation] or whether it should be made by [Company X], or alternatively, whether we should deny the claim to both.
All legislative references are to the Excise Tax Act and the regulations therein, unless otherwise specified.
Subsection 68.01(2) - Payment for end-users - fuel used as ships' stores - states that "If tax under this Act has been paid in respect of fuel and no application is made in respect of the fuel by any person under section 68.17 or 70, the Minister may pay an amount equal to the amount of that tax to a purchaser who applies for the payment and who uses the fuel as ships' stores."
As section 68.17 applies to manufacturers, wholesalers, jobbers, or other dealers, it would not be the relevant to the situation at hand, as neither [the Corporation] nor [Company X] is such an entity under the Act. Further, section 70 speaks to drawbacks on certain goods (including ships' stores), but is not under consideration in the instant case. Accordingly, only subsection 68.01(2) may apply (if at all).
68.01(2) stipulates that a payment may be made by the Minister "to a purchaser who applies for the payment and who uses the fuel as ships' stores". Upon review of the [...][agreement] between [the Corporation] and [Company X], it is clear that [Company X] would qualify as the purchaser and the user of the fuel. Under [...] [the agreement], it states that [...][direct quote]. It is reasonable to assume that this also applies to any federal excise tax under the Excise Tax Act, even though it is not explicitly referred to.
Further, [...] of the agreement, [...].
While the term "end user" is not defined in the Act, Black's Law Dictionary defines it as "The ultimate consumer for whom a product is designed." In the instant case, it is clear that although [Company X] is not the carrier that is using the fuel in their airplane, it is reasonable to consider them the deemed user of the fuel based on the relevant sections of [the agreement] alluded to above.
We therefore concur with your opinion [...], that being that we should deny the N-15 refund claim of [the Corporation], and that alternatively, [Company X], as the purchaser and deemed user, is entitled to apply for a refund claim under Subsection 68.01(2) of the Act.
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at (613) 957-1140.
Yours truly,
Neil Varan
Excise Taxes and Other Levies Unit
Excise Duties and Taxes Division
Excise and GST/HST Rulings Directorate
Email this Content