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: 9000312
Attention: [Client]
March 6, 2025
Dear [Client]:
Subject: Air Carriers under the Greenhouse Gas Pollution Pricing Act
Thank you for your letter of [Date], concerning the application of the Greenhouse Gas Pollution Pricing Act (the Act) to air carriers. We apologize for the delay in our response.
All legislative references are to the Act and the regulations therein, unless otherwise specified.
We understand from your letters and telephone conversations that you are a consultant in the airline industry and have clients that are registered under the Act. [Auditor name] of our division provided you with a verbal response on certain topics that you are satisfied with and you are requesting written confirmation for the questions listed below.
Interpretation Requested
You would like to know the following:
1. What is the criteria to claim rebates for an air carrier registered under the Act?
2. Can rebates be claimed prior to a registered air carrier’s effective date of registration?
3. What are the procedures/documentation that a registered air carrier has to follow to be exempt of the fuel charge under subsection 17(3). Do you have to be registered as a registered air carrier or registered specified air carrier to qualify for the exemption under subsection 17(3)?
Interpretation Given
1. Criteria for an air carrier to claim a rebate
Negative net fuel quantity
A registered air carrier (RAC) and registered specified air carrier (RSAC) must calculate and report a net fuel quantity (NFQ) every calendar month for each type of qualifying aviation fuel (QAF) they use and for each listed province that they operate in.
Under section 28, the NFQ of a RSAC in respect of a type of QAF for a reporting period of the person, for that type of fuel and for a listed province, is the amount determined by the formula: A – B, where A represents, in part, fuel used by the person in a covered air journey and B represents prescribed quantities of fuel. The result from this calculation can only be positive (charge) as nothing is currently prescribed for purposes of variable B. As a result, a RSAC cannot calculate a negative NFQ quantity and cannot claim a rebate for a reporting period under section 46 in respect of that QAF and the listed province.
Under section 30, the NFQ of a RAC in respect of a type of QAF for a reporting period of the person, for that type of fuel and for a listed province, is the amount determined by the formula: A – B, where A represents, in part, fuel used by the person in a covered air journey and B represents the volumes of QAF transferred into the supply tank of an aircraft in a listed province. The result from this calculation can be positive (charge) or negative (rebate). As a result, a RAC can calculate a negative NFQ quantity and claim a rebate for a reporting period under section 46 in respect of that QAF and the listed province, unlike a RSAC.
Bulk fuel removed from a listed province
Although this occurs infrequently, a RAC may also be eligible for a rebate where the conditions under section 43 are met. Under section 43, where a RAC brings in or imports a quantity of QAF into a particular listed province where a charge under section 19 or 20 was payable and accounted for, a rebate may be claimed when the RAC later removes the QAF from the particular listed province.
2. Rebates prior to registration
There are no provisions in the Act that provide for a rebate prior to registration as an air carrier. The rebate available under section 46 applies to a negative net fuel quantity calculation which can be achieved under section 30 and is currently only applicable to a RAC. The rebate available under section 43 is also only applicable to a RAC.
3. Application of Ships’ Stores Regulations
Subsection 17(1) of the Act requires a registered distributor in respect of a type of fuel to pay a charge when they deliver fuel of that type to another person in a listed province, in the amount determined under section 40. Under subsection 17(3), the charge payable by a registered distributor under subsection 17(1) is not payable if the fuel is, in accordance with the Ships’ Stores Regulations (SSRs), designated as ships’ stores for use on board a conveyance of a class prescribed under those regulations.
To meet the conditions of subsection 17(3), adequate documentation must be obtained and presented to a registered distributor. To qualify for fuel charge relief under SSRs,
the person accepting delivery of the fuel in the listed province must provide the registered distributor with a form issued by the Canada Border Services Agency. The most common forms provided to the registered distributor, depending on the classified conveyance, are the Ships’ Stores Declaration and Clearance Certificate (K36A) or other acceptable documentation such as a General Declaration (A6). Additional documentation may also be used to support the declaration that the conveyance qualifies under SSRs, however the information must include all of the following:
• name and address of the supplier and the purchaser;
• destination airport(s);
• identification of the eligible conveyance;
• fuel type;
• date and address of delivery; and
• the quantity of fuel delivered to the supply tank of the aircraft.
The exemption under subsection 17(3) provides fuel charge relief upfront. If SSRs did not apply to a delivery of a type of QAF in a listed province, it will result in the fuel charge being embedded in the price of the fuel. There is no mechanism that would allow the RSAC to obtain a refund from the CRA for the embedded fuel charge in the price of the fuel. Any questions regarding embedded charges are a matter between the supplier and its customer.
Generally speaking, a person that would qualify under subsection 17(3) for an exemption under SSRs would also be required to register as an air carrier given that they would meet the requirements of subsection 60(1).
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 Cameron Peebles directly at 365-323-2614.
Sincerely,
Tim Hord
Manager
Excise Taxes and Other Levies
Legislative Policy and Regulatory Affairs Branch
Excise and Specialty Tax Directorate
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