Please note that the following document, although correct at the time of issue, may not represent the current position of the Agency. / Veuillez prendre note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'Agence.
Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 15th floor
320 Queen Street
Ottawa ON K1A 0L5
XXXXX
XXXXX
XXXXX
Case Number: 112878
Attention: XXXXX
XXXXX XXXXX
June 4, 2009
Subject:
EXCISE INTERPRETATION
XXXXX
Thank you for your XXXXX of XXXXX concerning the application of the Excise Tax Act to the operations of XXXXX. We apologize for the delay in responding. In your email, you have requested clarification on how the federal excise tax (FET) would apply to fuel exchange agreement between XXXXX and a seperate fuel supplier.
Statement of Facts
Based on the information in your XXXXX, the following is our understanding of the issue:
1. XXXXX is a licensed fuel manufacturer for purposes of the FET.
2. XXXXX has entered into a fuel exchange agreement with a separate fuel supplier (Supplier "B"). Supplier "B" does not hold any licenses for purposes of the FET.
3. Under the fuel exchange agreement, a customer of XXXXX (Customer "A") will lift fuel product from the bulk plant of supplier "B" located in XXXXX. Supplier "B" does not invoice Customer "A" for fuel taken from the facility. XXXXX will issue an invoice to Customer "A" for the fuel and account for any FET owing the Canada Revenue Agency (CRA).
4. As part of the fuel exchange agreement, Supplier "B" does not invoice XXXXX for product taken from its bulk facility by Customer "A". Instead, Supplier "B" will lift fuel product from XXXXX depot.
5. There are no invoices generated between XXXXX and Supplier "B". Ultimately, XXXXX and Supplier "B" will exchange and equal amount of fuel product.
6. Fuel product held at XXXXX depot would be FET tax-exempt while product kept at the facility of Supplier "B" is FET tax-paid.
Interpretation Requested
You would like confirmation on how the FET should be accounted for on the fuel exchange agreement between XXXXX and Supplier "B".
Interpretation Given
The ETA does not contain any specific provisions dealing with fuel exchange agreements. As such, the general rules of the ETA must be applied to the agreement in order to properly account for the FET.
The CRA considers the fuel exchange agreement as two separate transactions for purposes of the FET. The fuel lifted by Customer "A" from the facility of Supplier "B" is one transaction, while the product taken from XXXXX depot by Supplier "B" would be the other transaction.
Product Taken from XXXXX Depot by Supplier "B"
Subsection 23(1) of the ETA, subject to subsections (6) to (8), imposes excise tax on goods listed in Schedule I to the ETA that are manufactured in Canada and are delivered to a purchaser of those goods. Even though no sales invoices are issued between XXXXX and Supplier "B", under the ETA, the delivery of the fuel and not a sale triggers the imposition of the FET. For this reason, the FET must be taken into consideration for this transaction.
When Supplier "B" lifts fuel from XXXXX depot, the CRA considers this a delivery of fuel, and as such, the FET would be applicable on this transaction. XXXXX would be required to account for and remit the FET on their monthly tax return for the fuel pulled by Supplier "B".
Product Taken from the Depot of Supplier "B" by Customer "A"
Under this transaction, Customer "A" would be lifting FET tax-paid product from the depot of Supplier "B". Since the FET has already been paid on the fuel held by Supplier "B", no further accounting of excise tax is required.
XXXXX may choose to invoice Customer "A" that fuel product taken from Supplier "B" includes the FET, however, there is no requirement for XXXXX to remit the FET on the product taken by Customer "A" as the excise has already been paid on the fuel.
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.
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at (613) 954-5899.
Yours truly,
Darren Weiner
Excise Tax and Other Levies Unit
Excise Duties and Taxes Division
Excise and GST/HST Rulings Directorate
UNCLASSIFIED
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