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: 9000237
Attention: [Client]
January 23, 2025
Dear [Client]:
Subject: Interpretation – Fuel charge exemption certificates and rebate for fuel charge overpayment
Thank you for your letter of [mm-dd-yyyy], concerning the application of the Greenhouse Gas Pollution Pricing Act (the Act) to a person’s eligibility for a rebate of an overpayment of the fuel charge.
All legislative references are to the Greenhouse Gas Pollution Pricing Act and the regulations therein, unless otherwise specified.
We understand that you are seeking clarification to the interpretation of relevant provisions of the Act as well as Canada Revenue Agency (CRA) publication FCN 14, Rebate under Section 49 (FCN14) on behalf of [Company A], a registered emitter, who you are authorized to represent.
Please note that FCN 14 has been removed from the CRA on August 29, 2024.
INTERPRETATION REQUESTED
Your letter is being addressed as three requests which will each be addressed separately.
Request 1:
You are requesting clarification regarding CRA’s interpretation of the phrase “in respect of” as it pertains to the timing of the delivery of an exemption certificate under sections 17 and 36. You assert that neither of these sections specify that an exemption certificate must be delivered “at, or prior to, the time of the delivery,” just that an exemption certificate must apply “in respect of” the delivery.
Request 2:
You are requesting clarification regarding CRA’s interpretation of sections 36 and 49 as to whether a rebate may be applied for by registered emitters that use fuel at their covered facilities. You assert that subparagraph 36(1)(b)(v) provides that an exemption certificate will apply in respect of the delivery where the person is a registered emitter and that the fuel is for use at a covered facility of that person. Section 49 does not specify which persons are eligible for a rebate but FCN 14 provided that persons eligible for a rebate include registered emitters that use fuel outside their covered facilities.
Request 3:
You are requesting clarification regarding the CRA’s interpretation of the application of sections 108 and 109 to the restrictions on rebates under section 49.
INTERPRETATION GIVEN
As your requests are on behalf of [Company A], a registered emitter, the interpretations given will discuss the relevant provisions of the Act as they pertain to registered emitters.
Request 1:
Under subsection 17(1), a registered distributor in respect of a type of fuel that delivers, at a particular time, fuel of that type in a listed province to another person must pay the fuel charge to the CRA in respect of the fuel and listed province. Subsection 17(2) outlines criteria whereby the fuel charge is not payable under subsection 17(1). This includes where the delivery is made to another person that is a registered emitter and an exemption certificate applies in respect of the delivery in accordance with section 36.
Paragraphs 36(1)(a) to (d) contain the conditions for an exemption certificate to apply in respect of a delivery, and are as follows:
o The certificate is made in prescribed form containing prescribed information,
o The certificate includes a declaration that the person is one of the persons eligible to use the exemption certificate as outlined in paragraph 36(1)(b),
o the person provides, in a manner satisfactory to the Minister, the certificate in respect of the delivery to the other person, and
o the registered distributor retains the certificate and indicates to the person, in a manner satisfactory to the Minister, that the delivery is subject to the certificate.
While the phrase “in respect of” may be broadly interpreted by the courts in the cases you cited, the conditions of paragraph 36(1)(c) must still be met. Paragraph 36(1)(c) specifies that the certificate must be provided “in a manner satisfactory to the Minister.1” CRA`s position is that this provision includes the timing requirement for an exemption certificate, that is on or before delivery, in order to meet the condition of being satisfactory to the Minister. Therefore an exemption certificate does not apply in respect of a delivery of a type of fuel in a listed province when provided after the delivery and the fuel charge has been reported to the CRA, as the exemption certificate was not provided in a manner satisfactory to the Minister.
To meet the conditions of paragraph 36(1)(d), a registered distributor must also retain a copy of the exemption certificate and confirm to the person that the delivery is subject to the exemption certificate. This could include “0” on the person’s invoice for the fuel charge, or a statement that the delivery is subject to the exemption certificate. A registered distributor cannot confirm the latter if an exemption certificate was not provided on or before the time of delivery and the delivery has been invoiced.
Request 2:
Under section 49, the Minister must pay a rebate to a person if the person paid an amount in excess of the amount that was payable by that person under this Part, whether the amount was paid by mistake or otherwise.
Fuel can be delivered by a registered distributor to a registered emitter without the fuel charge being payable at that time, for fuel used at a covered facility, if an exemption certificate is provided in accordance with the provisions of section 36. If an exemption certificate is not provided by the registered emitter in respect of the delivery, the fuel charge must be reported and paid by the registered distributor under subsection 17(1) and may become part of the cost of the fuel delivered. Under this scenario, there is no error in the amount payable by the registered emitter.
Request 3:
Subsection 108(1) gives the Minister the authority to assess a person for a charge or an amount payable by the person and to vary that assessment, reassess, or make any additional assessments. Subsection 108(4) states that where a person has paid an amount assessed and upon a reassessment, that amount exceeds the amount payable, the Minister must provide a rebate to the person equal to the excess. It deems that the rebate is payable on the day the payment was received. Subsection 108(5) states that where the Minister takes into account any rebate payable to the person being assessed, the person is deemed to have applied for the rebate on the day the notice of assessment is sent.
Subsection 49(3) states that a rebate under section 49 must not be paid to the person to the extent
(a) the amount was taken into account as an amount required to be paid by the person in respect of a reporting period of the person and the Minister has assessed the person for that period under section 108; or
(b) the amount was an amount assessed under section 108
In the case where an amount was previously reported and assessed under section 108, a registrant is required to file an amended return to claim any overpaid amounts rather than claiming a rebate under section 49.
A rebate under section 49 is therefore only applicable where a person has paid an amount to the Minister in excess of the amount that was payable by that person and that amount has not been assessed in a reporting period.
Subsection 109(1) states that the Minister must consider a rebate application and assess the amount of the rebate, if any, payable to the person. In addition, subsection 109(2) states that the Minister may also reassess or make an additional assessment of a rebate despite any previous assessment of the amount of the rebate.
The interpretations given in this letter, including any additional information, is not a ruling and does not bind the 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 905-719-5752.
Sincerely,
Melanie Pearce
Senior Rulings Officer
Fuel Charge Unit
Excise Tax and Fuel Charge Division
Excise and Specialty Tax Directorate
1 Minister means any position with delegated authority under the GGPPA in relation to subsection 36(1).
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