TO:
|
XXXXX
|
FROM:
|
David Crawford
General Operations Unit
General Operations & Border Issues Division
|
Subject:
|
XXXXX
Farm Fuel Distribution Allowance
|
This is in reply to your memorandum of September 2, 1998, requesting a review of your interpretation of the Excise Tax Act as it applies to XXXXX as a possible reduction of the consideration paid for diesel fuel sold to farmers.
Facts
Legislative Scheme
Tax
• XXXXX requires that the tax imposed at the rate of XXXXX per litre is payable by the consumer on all fuel oil purchased in XXXXX[.]
• Under XXXXX marked fuel is exempt from the tax provided the fuel is used in accordance with the conditions set forth in XXXXX[.]
• Only registered persons may sell fuel oil for resale purposes.
• Registered sellers are agents of the Minister and are responsible for the collecting and remitting the tax from the consumer at the time of the consumer purchases the fuel.
• In the case of farmers, no person can possess marked fuel unless they have been issued a certificate by either the XXXXX[.]
• Any person who sells marked fuel must sell the fuel at no gain to a consumer who holds a certificate.
Allowance
• XXXXX allows consumers who have been issued a certificate to purchase marked fuel net of the allowance amount prescribed by regulation under the authority of XXXXX[.] The regulations prescribe the allowance to be XXXXX per litre.
• Where consumers purchase tax paid fuel oil because marked fuel was not reasonably available, or because marked fuel would void the manufacturer's warranty and use it for a purpose that would have been eligible for the XXXXX or fuel oil that was consumed in a farm truck that is a qualified motor vehicle under XXXXX may pay a grant instead of the above described allowance
• Payments of the allowance are made from money voted by the legislature for this purpose.
• XXXXX may provide accountable advances in respect of the allowance to dealers.
Contravention
• If a dealer sells marked fuel in contravention of the Act, both the dealer and the consumer are jointly liable to pay the Minister an amount equal to the allowance.
• If the consumer contravenes the Act by using the fuel for a purpose that does not qualify, the consumer is liable to pay an amount equal to the allowance.
• If the dealer sells marked fuel at a price higher than the reduced price, the dealer must pay to the Minister an amount equal to the amount by which the actual price exceeds the reduced price.
Question
Is the reduction in the price of marked fuel by the amount of XXXXX a reduction of the consideration for GST purposes?
Reply
The value of the consideration for the purposes of the Excise Tax Act is the amount charged by dealers before the reduction in price of marked fuel under XXXXX.
Rationale
The amount paid to dealers by XXXXX is to reduce the cost of fuel consumed for eligible purposes by farmers. It is the farmers who are actually entitled to the benefit under the XXXXX program. The value of the fuel being sold remains unchanged except that the dealer must take into account the amount of the XXXXX to reduce the cost of fuel to eligible farmers. For the purpose of the Excise Tax Act, the XXXXX paid does not reduce the consideration for the fuel. In fact, it is part of the consideration for the supply of the fuel. Consequently, the GST should be calculated on the price prior to the reduction on account of the XXXXX program.
Should you have any questions please contact me at 613-954-7931.
David Crawford
General Operations Unit
FILE CONTENTS
A. Outgoing reply
B. Memorandum from XXXXX
C. Research
1. RITS printout
2. XXXXX
4. HQ Fuel correspondence
5. E-mails
Legislative References:
NCS Subject Code(s):