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, 20th floor
320 Queen Street
Ottawa ON K1A 0L5
XXXXX
XXXXX
XXXXX
Case Number: # 117774
Attention: XXXXX
XXXXX
February 11, 2010
Dear XXXXX:
Subject:
GST/HST INTERPRETATION
Application of Excise Tax on diesel fuel used off-road
Thank you for your letter of XXXXX concerning the application of excise tax to diesel fuel used off-road.
All legislative references are to the Excise Tax Act (ETA) and their regulations unless otherwise specified.
Statement of Facts
Our understanding is as follows:
XXXXX has a tractor/trailer combination that is used off-road, and uses a power-take-off (PTO) system to deliver hydraulic power to the trailer for unloading purposes.
The PTO is directly connected to the truck's primary diesel engine and therefore consumes tax-paid diesel to drive the PTO (hydraulic) unit.
You have the ability to measure fuel burn rates through the onboard engine computer.
Interpretation Requested
You would like to know whether you can use the burn rate calculations to claim a rebate of the excise tax for diesel fuel used to power the PTO unit.
Interpretation Given
The excise tax would apply to the diesel fuel used to power the PTO unit of the trailer.
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 for use and is actually used as heating oil.
Following a decision by the Canadian International Trade Tribunal in 2000, the Canada Revenue Agency (CRA) has adopted the definition of heating oil as being "any fuel oil for use in oil-burning equipment for the generation of heat for domestic or industrial purposes"
In the circumstances outlined in your letter, the diesel fuel is used to power the hydraulic system for unloading purposes and as it is not intended for, or actually used as heating oil, the fuel would be taxable.
We have also given consideration to Paragraph 23(8)(c) of the ETA, which provides for the non payment of excise tax in the case of "diesel fuel for use in the generation of electricity, except where the electricity so generated is used primarily in the operation of a vehicle."
The generation of electricity in these circumstances refers to "hotel services" which are those services that provide for the comfort and convenience of the passengers and/or crew, such as heat/air conditioning, light, entertainment and the preparation of meals, and not related to the operation of the vehicle. Since the diesel fuel is not for use in the generation of electricity for hotel services, it is not eligible for the exemption provided under paragraph 23(8)(c) of the ETA.
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, Excise and GST/HST Rulings and Interpretations Service, do not bind the CRA with respect to a particular situation. Future changes to the ETA, regulations, or our interpretive 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 613-957-4138. Should you have additional questions on the interpretation and application of Excise or GST/HST, please contact a GST/HST Rulings officer at 1-800-959-8287.
Yours truly,
Nathalie Robitaille
Excise Taxes and Other Levies Unit
Excise Duties and Taxes Division Division
Excise and GST/HST Rulings Directorate
UNCLASSIFIED
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