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 and Specialty Tax Directorate
5th floor, Tower A, Place de Ville
320 Queen Street
Ottawa ON K1A 0L5
[Addressee]
Case Number: 9000280
Business Number: [Business Number]
Attention: [Client]
June 11 2024
Dear [Client]:
Subject: Determination of [product] as light fuel oil for purposes of the GGPPA
Thank you for your letter dated [mm/dd/yyyy], concerning the application of the Greenhouse Gas Pollution Pricing Act (the Act) and its regulations to determine whether [product] is light fuel oil as defined in the Act.
STATEMENT OF FACTS
We understand the following information pertaining to your request:
1. [Client] located in, [city],[province], processes heavy crude feedstock into light end products that are sold into the roofing flux, road asphalt, oil and gas drilling fluids and feedstock markets.
2. [Client] produces [product] which is described as a clear colorless petroleum gas oil with a hydrocarbon odor.
3. You stated that [product] is a middle distillate product which is primarily used as a base oil for drilling fluid applications, providing lubrication, cooling, waste material removal and separation.
4. You stated that [product] occasionally serves as a petroleum solvent to dissolve the asphalt cement which leads to the production of three types of asphalt cutbacks namely, rapid curing, medium curing and slow curing depending on the amount and type of solvent used.
5. You stated that [product] is not used for combustion in the production of asphalt cutbacks.
Interpretation Requested
You would like to know the following:
1. Whether [product] is light fuel oil for the purposes of the Act;
2. Whether [client] has compliance obligations if [product] is light fuel oil.
Interpretation Given
We considered the three-part definition of light fuel oil below as per section 3 of the Act to determine whether [product] is light fuel oil given that [product] is a distillate that has a viscosity not greater than 14 centistokes at 50°C.
Light fuel oil means a substance that}
(a) is made up of
(i) a distillate or a residual of crude oil that has a viscosity not greater than 14 centistokes at 50°C, or
(ii) biodiesel;
(b) is suitable for generating power by means of a diesel engine or is suitable for use in a furnace, boiler or open flame burner; and
(c) is not butane, ethane, gas liquids, aviation turbo fuel, kerosene, naphtha, propane, pentanes plus or still gas. (mazout léger)
In accordance with the Gibson Energy safety data sheet provided, the viscosity of [product] is 5.7 centistokes at 40°C which aligns with the criteria of light fuel oil under subparagraph 3(a)(i) of the Act.
As part of the definition of light fuel oil under paragraph 3(b), we must determine if [product] is suitable for generating power by means of a diesel engine or is suitable for use in a furnace, boiler or open flame burner.
Although [product] is compatible with a range of temperature and pressure conditions, the chemical and physical properties of [product] would render it unsuitable for use in a diesel engine. As stated in your letter, [product] is mainly used as a base oil for drilling fluids to minimize environmental impacts and as a petroleum solvent to dissolve asphalt cement. [Product] does not have the chemical and physical properties for use in a furnace, boiler or open flame burner. Therefore, [product] does not meet the definition of light fuel oil under paragraph 3(b) of the Act.
[Product] meets the criteria outlined under paragraph 3(c) for light fuel oil as it is not considered any of the fuel types, specifically, butane, ethane, gas liquids, aviation turbo fuel, kerosene, naphtha, propane, pentanes plus or still gas.
Section 15 of the Act states that if a substance is not fuel but is sold, represented or marketed as fuel of a particular type, the substance is deemed to be fuel of the particular type, except if the substance is prepackaged in a factory sealed container of 10 L or less, is combustible waste or is a prescribed substance. Based on the information provided, [product] is not a substance marketed as a fuel, prepackaged or a prescribed substance, therefore it is not deemed to be a fuel as per section 15 of the Act.
For the purposes of the Act, [product] is not light fuel oil as it does not meet all conditions outlined in the definition of light fuel oil under section 3 of the Act. Consequently, [client] has no reporting obligations in regards to the current applications of [product] in its operations.
The interpretations given in this letter, including any additional information, is not a ruling and does not bind the Canada Revenue Agency (CRA) with respect to a particular situation. Future changes to the Act, regulations, or the CRA’s interpretative policy could affect the interpretations or the additional information provided herein. For further information see the publication “Requesting an Excise and Specialty Tax Ruling or Interpretation”.
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 289-440-1728.
Sincerely,
Vinella Kistnasamy
Rulings Officer
Fuel Charge Unit
Excise Duties and Taxes Division
Excise and Specialty Tax Directorate
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