FCN8 Air Carriers, Marine Carriers, Specified Air Carriers or Specified Marine Carriers Under the Greenhouse Gas Pollution Pricing Act

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FCN8 Air Carriers, Marine Carriers, Specified Air Carriers or Specified Marine Carriers Under the Greenhouse Gas Pollution Pricing Act

From: Canada Revenue Agency

March 2019

The purpose of this notice is to provide information on registration, filing and reporting requirements to persons that are required to register as air carriers or marine carriers under Part 1 of the Greenhouse Gas Pollution Pricing Act. It also provides information to registered air carriers or registered marine carriers that choose to register as specified air carriers or specified marine carriers.

Interjurisdictional air carriers and interjurisdictional marine carriers should carefully review the information contained in this notice since a clear understanding of the legislative provisions is key to remaining compliant with the Act.

For more information on the other types of registration under the Act and the registration process, refer to Fuel Charge Notice FCN1, Registration Under the Greenhouse Gas Pollution Pricing Act.

The information in this notice is for reference purposes only and does not replace the Greenhouse Gas Pollution Pricing Act or its regulations. The information described in this notice is also based, in part, on the Draft Regulations Amending Part 1 of Schedule 1 and Schedule 2 to the Greenhouse Gas Pollution Pricing Act and the Backgrounder: Fuel Charge Rates in Listed Provinces and Territories. The Draft Regulations and the Backgrounder were included as attachments to the news release entitled Department of Finance Announcing Climate Action Incentive Payments and Launch of Fuel Charge Consultations that was issued on October 23, 2018. Any reference that is made in this notice to April 1, 2019 or July 1, 2019 is as proposed in the Draft Regulations. Any reference that is made in this notice to a particular listed province refers to Manitoba, New Brunswick, Nunavut, Ontario, Saskatchewan and Yukon, as proposed in the Draft Regulations. Any commentary contained in this notice should not be taken as a representation by the Canada Revenue Agency (CRA) that the Draft Regulations will eventually be made in their current form.

Should there be any discrepancy between the information in this notice and the legislative provisions in the Act or its regulations, the legislative provisions apply. For more information about the Act and its regulations, including all related technical publications, go to Fuel charge technical information.

All legislative references in this publication are to the Act, unless otherwise specified.

Table of Contents

Overview

As part of the Government of Canada’s initiative to implement a federal carbon pollution pricing system, and taking into consideration provincial carbon pollution pricing systems, the Government of Canada has developed a federal carbon pollution pricing system composed of a fuel charge that applies to fossil fuels and an output-based pricing system (OBPS) for industrial facilitiesFootnote 1.

The federal system applies in provinces and territories where a provincial or territorial carbon pollution pricing system has not been put into place or the system does not meet the federal standard. The Canada Revenue Agency (CRA) will be responsible for administering and enforcing the fuel charge component of the federal system beginning April 1, 2019, as proposed, for the proposed listed provinces of Manitoba, New Brunswick, Ontario and Saskatchewan and beginning July 1, 2019, as proposed, for the proposed listed provinces of Nunavut and Yukon (the listed provinces). For the applicable rates of the charge on the various fuel types and combustible waste, go to Fuel Charge Rates.

This notice provides information on the requirements to register as an air carrier or a marine carrier (collectively referred to as air or marine carriers, where applicable), as well as on reporting and filing obligations. It also provides information for registered air or marine carriers that choose to register as specified air carriers or specified marine carriers (collectively referred to in this notice as specified air or marine carriers, where applicable). These persons should carefully review the information included in this notice and should also familiarize themselves with the Act, its regulations and other related notices. They may also contact the CRA for additional information and clarification.

Information on registration

Air carriers and specified air carriers

Mandatory registration

Under subsection 60(1), a person (other than a registered emitter) that is an interjurisdictional air carrier in respect of a type of fuel that is a qualifying aviation fuel is required to be registered at a particular time:

  1. unless paragraph (b) applies, as an air carrier in respect of that type of fuel if it can reasonably be expected that, during the calendar year that includes the particular time, all or substantially all of the fuel of that type used by the person will be used in vehicles and the greatest proportion of the fuel used in vehicles will be used in aircraft; or
  2. as either a specified air carrier or an air carrier in respect of that type of fuel if:
    1. during the calendar year that includes the particular time, all or substantially all of the fuel of that type used by the person is used in vehicles and the greatest proportion of the fuel used in vehicles is used in aircraft; and
    2. the person is a qualifying interjurisdictional air carrier in respect of that type of fuel throughout the calendar year that includes the particular time.

Qualifying interjurisdictional air carrier

Previous year journeys

An interjurisdictional air carrier in respect of a type of fuel that is a qualifying aviation fuel is a qualifying interjurisdictional air carrier in respect of fuel of that type throughout a particular calendar year if the interjurisdictional air carrier completed journeys by aircraft in the calendar year that preceded the particular calendar year and the amount determined by the following formula is greater than, or equal to, 0.5:

A ÷ B [under subsection 60(2)]
Where
A is the total of all quantities, each of which is a quantity of fuel of that type that was used by the interjurisdictional air carrier in an excluded air journey during the preceding calendar year
B is the total of all quantities, each of which is a quantity of fuel of that type that was used by the interjurisdictional air carrier in a covered air journey or an excluded air journey during the preceding calendar year

If the amount determined by the formula is greater than, or equal to, 0.5, a qualifying interjurisdictional air carrier can choose to register as a specified air carrier. A registered specified air carrier can provide an exemption certificate to a registered distributor or another registered specified air carrier allowing the delivery of qualifying aviation fuel to it without a charge being applied at that time. For more information on exemption certificates, refer to the section “Exemption certificates” later in this notice.

A registered air carrier cannot provide an exemption certificate to its supplier. Consequently, a fuel charge will be embedded in the price it pays on qualifying aviation fuel. A registered air carrier is also liable to pay a fuel charge at the time of importing fuel or bringing fuel from a place in Canada, into a listed province.

The difference in treatment between registered air carriers and registered specified air carriers can be explained by the fact that most journeys of a registered specified air carrier are excluded air journeys that are not subject to the fuel charge. By comparison, most journeys of a registered air carrier are between 2 locations in a listed province and qualify as covered air journeys that are subject to the fuel charge.


Example – Registering as a specified air carrier


A Canadian air carrier provides an air transportation service in Canada and a transborder service to the United States. It provides flights, carrying passengers and goods across provinces, into the United States and within a listed province. Because the air carrier has journeys that begin or end in a listed province, it is required to register as an air carrier. The air carrier wishes to determine whether it can register as a specified air carrier. To do so, the air carrier must determine if it meets the conditions as a qualifying interjurisdictional air carrier. The information below is gathered by the air carrier.

In 2018, this air carrier used 10,000 litres of aviation turbo fuel, of which 3,000 litres were used in covered air journeys, which are journeys between 2 locations, both of which are in a listed province, and 7,000 litres were used in excluded air journeys, which are journeys that only begin or end in a listed province.

In order to determine if it is a qualifying interjurisdictional air carrier, the formula A ÷ B is used, where:

A is 7,000 litres (the quantity of aviation turbo fuel used in excluded air journeys)

B is 10,000 litres (the quantity of aviation turbo fuel used in both covered air journeys and excluded air journeys)

The amount determined for the previous year journeys for the qualifying interjurisdictional air carrier is 0.7 (7,000 litres ÷ 10,000 litres).

The result of the calculation is greater than the threshold of 0.5. Therefore, the air carrier is a qualifying interjurisdictional air carrier and is eligible to register as a specified air carrier.

No previous year journeys

A person that is, or that can reasonably be expected to be, an interjurisdictional air carrier in respect of a type of fuel that is a qualifying aviation fuel is a qualifying interjurisdictional air carrier in respect of fuel of that type throughout a particular calendar year if the person did not complete journeys by aircraft in the calendar year that preceded the particular calendar year and the amount determined by the formula described above is greater than, or equal to, 0.5.

The amount is determined using the formula above (A ÷ B), except that the values of A and B are based on the projected use of fuel of that type in excluded air journeys and covered air journeys during the particular calendar year.

Timing of registration

A person that is required under section 60 to be registered as an air carrier or that meets the conditions to register as a specified air carrier in respect of a type of fuel must apply for registration before the later of:

  • April 1, 2019, for Manitoba, New Brunswick, Ontario and Saskatchewan or July 1, 2019, for Nunavut and Yukon; and
  • the day that the carrier first meets the conditions stated above.

Under section 126, a person that is required to be registered as an air carrier or a specified air carrier but does not apply for registration as and when required is liable to pay a penalty of $2,000.

Marine carriers and specified marine carriers

Mandatory registration

Under subsection 61(1), a person (other than a registered emitter) that is an interjurisdictional marine carrier in respect of a type of fuel that is a qualifying marine fuel is required to be registered at a particular time:

  1. unless paragraph (b) applies, as a marine carrier in respect of that type of fuel if it can reasonably be expected that, during the calendar year that includes the particular time, all or substantially all of the fuel of that type used by the person will be used in vehicles and the greatest proportion of the fuel used in vehicles will be used in vessels; or
  2. as either a specified marine carrier or a marine carrier in respect of that type of fuel if:
    1. during the calendar year that includes the particular time, all or substantially all of the fuel of that type used by the person is used in vehicles and the greatest proportion of the fuel used in vehicles is used in vessels; and
    2. the person is a qualifying interjurisdictional marine carrier in respect of that type of fuel throughout the calendar year that includes the particular time.

Qualifying interjurisdictional marine carrier

Previous year journeys

An interjurisdictional marine carrier in respect of a type of fuel that is a qualifying marine fuel is a qualifying interjurisdictional marine carrier in respect of fuel of that type throughout a particular calendar year if the interjurisdictional marine carrier completed journeys by vessel in the calendar year that preceded the particular calendar year and the amount determined by the following formula is greater than, or equal to, 0.5:

A ÷ B [under subsection 61(2)]
Where
A is the total of all quantities, each of which is a quantity of fuel of that type that is used by the interjurisdictional marine carrier in an excluded marine journey during the preceding calendar year
B is the total of all quantities, each of which is a quantity of fuel of that type that is used by the interjurisdictional marine carrier in a covered marine journey or an excluded marine journey during the preceding calendar year

If the amount determined by the formula is greater than, or equal to, 0.5, a qualifying interjurisdictional marine carrier can choose to register as a specified marine carrier. A registered specified marine carrier can provide an exemption certificate to a registered distributor or another registered specified marine carrier allowing the delivery of qualifying marine fuel to it without a charge being applied at that time. For information on exemption certificates, refer to the section “Exemption certificates” later in this notice.

A registered marine carrier cannot provide an exemption certificate to its supplier. Consequently, a fuel charge will be embedded in the price it pays on qualifying marine fuel. A registered marine carrier is also liable to pay a fuel charge at the time of importing fuel or bringing fuel from a place in Canada, into a listed province.

The difference in treatment between registered marine carriers and registered specified marine carriers can be explained by the fact that most journeys of a registered specified marine carrier are excluded marine journeys that are not subject to the fuel charge. By comparison, most journeys of a registered marine carrier are between 2 locations in a listed province and qualify as covered marine journeys that are subject to the fuel charge.

No previous year journeys

A person that is, or that can reasonably be expected to be, an interjurisdictional marine carrier in respect of a type of fuel that is a qualifying marine fuel is a qualifying interjurisdictional marine carrier in respect of fuel of that type throughout a particular calendar year if the person did not complete journeys by vessel in the calendar year that preceded the particular calendar year and the amount determined by the formula described above is greater than, or equal to, 0.5.

The amount is determined using the formula above (A ÷ B), except that the values of A and B are based on the projected use of fuel of that type in excluded marine journeys and covered marine journeys during the particular calendar year.

Timing of registration

A person that is required under section 61 to be registered as a marine carrier or that meets the conditions to register as a specified marine carrier in respect of a type of fuel must apply for registration before the later of:

  • April 1, 2019, for Manitoba, New Brunswick, Ontario and Saskatchewan or July 1, 2019, for Nunavut and Yukon; and
  • the day on which the carrier first meets the conditions outlined above.

Under section 126, a person that is required to be registered as a marine carrier or a specified marine carrier but does not apply for registration as and when required is liable to pay a penalty of $2,000.

Applying for registration

To apply for registration as an air or marine carrier or a specified air or marine carrier, a person must complete Form L400, Fuel Charge Registration. Even where the person applies for more than one type of registration, only one registration form is required, unless an application for authority to file separate returns under subsection 88(1) is submitted. The person must also complete Form L400-1, Fuel Charge Registration Schedule. Information on other registration types can be found in Fuel Charge Notice FCN1, Registration Under the Greenhouse Gas Pollution Pricing Act.

Registration forms can be submitted electronically using the “Submit documents” function in My Business Account. If the person submits a registration application electronically, that person will be provided with a confirmation number. This confirmation number should be retained for follow-up on the status of the application.

The person can also send the completed registration forms by mail to the following address:

Sudbury Tax Centre
Fuel Charge Program
Post Office Box 20000, Station A
Sudbury ON P3A 5C1

The processing of the fuel charge registration may be delayed in the case of missing or incomplete information.

If the application for registration is approved, the CRA will inform the person in writing of its registration number and the effective date of registration.

Authority for separate returns

Under subsection 88(1), a person that engages in one or more activities in separate branches or divisions may apply to the CRA for authority to file separate returns and rebate applications under Part 1 of the Act for a branch or division. The application to file separate returns must be submitted in the form of a letter at the time of registration.

The person must complete the application and, for each branch or division, confirm that the following requirements are met:

  • the branch or division indicated in the application can be separately identified by reference to its location or the nature of the activities in which it is engaged; and
  • separate records, books of account and accounting systems are maintained for the branch or division.

A separate Form L400 should be used for each branch or division, along with Form L400-1.

The application and forms can be submitted electronically using the “Submit documents” function in My Business Account or by mail to the Sudbury Tax Centre at the address listed above.

If the application to file separate returns is approved, the CRA will inform the person in writing and the authorization will remain in effect until:

  • the person requests the revocation of the authorization in writing;
  • the person fails to comply with any condition of the authorization or any provision of Part 1 of the Act;
  • the CRA is no longer satisfied that the requirements of the authorization are met; or
  • the CRA considers that the authorization is no longer required.

Under these conditions, the CRA will revoke the authorization and send a notice in writing to the person, specifying the effective date of the revocation.

Applying for more than one type of registration

In addition to applying for registration as an air or marine carrier or a specified air or marine carrier, a person may also register as a user of fuel if it uses fuel of that type in a non-covered activity in a listed province. For more information on registered users of fuel, refer to Fuel Charge Notice FCN7, Users Under the Greenhouse Gas Pollution Pricing Act.

A registered air or marine carrier or a registered specified air or marine carrier is also required to register as a user of combustible waste if it burns combustible waste, such as tires or asphalt shingles, in a listed province for the purpose of producing heat or energy. For more information about registered users of combustible waste, refer to Fuel Charge Notice FCN7.

Refer to Fuel Charge Notice FCN1, Registration Under the Greenhouse Gas Pollution Pricing Act, for information on applying for other types of registration in respect of other types of fuel.

Cancelling a registration

Under subsection 65(9), if a person is registered as an air carrier, a marine carrier, a rail carrier, a specified air carrier, a specified marine carrier or a specified rail carrier in respect of a type of fuel, the CRA must cancel whichever of those registrations applies when registering the person as an air carrier or a specified air carrier, in respect of that type of fuel, a marine carrier or a specified marine carrier, in respect of that type of fuel, a rail carrier or specified rail carrier, in respect of that type of fuel, or as an emitter.

Also, a registered air or marine carrier or a registered specified air or marine carrier that believes it is no longer required to be registered (for example, if ownership changes or business activity ceases) may request that the CRA cancel its registration. The registered air or marine carrier or registered specified air or marine carrier must notify the CRA in writing when this occurs, noting the reason for requesting the cancellation and the effective date. The CRA must cancel the registration if satisfied that the registration is not required.

The registered air or marine carrier or registered specified air or marine carrier can submit the request electronically using the “Submit documents” function in My Business Account or by mail to the Sudbury Tax Centre at the address listed in the section “Applying for registration” above. Filing and reporting requirements remain in effect until the effective date of cancellation.

Finally, the CRA may also cancel a registration if it is satisfied that the registration is not required, after giving the person reasonable notice. In this case, the CRA will notify the person of the cancellation and the effective date of the cancellation.

Information on the fuel charge

Generally, a charge applies to 21 types of fuel delivered, transferred, used, produced, imported or brought into Manitoba, New Brunswick, Ontario or Saskatchewan beginning April 1, 2019, and Nunavut or Yukon beginning July 1, 2019. A charge also applies on combustible waste when it is burned in a listed province for the purpose of producing heat or energy.

Registered air or marine carrier

A fuel charge will be embedded in the price that a registered air or marine carrier pays for qualifying aviation fuel or qualifying marine fuel, as the case may be, because the registered air or marine carrier is not eligible for an exemption certificate. For more information, refer to the section “Exemption certificates” in this notice.

A registered air or marine carrier is also liable to pay a fuel charge at the time fuel is imported at a location in a listed province or brought into a listed province from a place in Canada.

Registered specified air or marine carrier

A registered distributor can deliver qualifying aviation fuel to a registered specified air carrier or qualifying marine fuel to a registered specified marine carrier without the charge being applied at the time of delivery if the registered specified air or marine carrier provides an exemption certificate in accordance with section 36. A registered specified air carrier can also deliver qualifying aviation fuel to another registered specified air carrier without the charge being applied at that time if the registered specified air carrier that accepts the delivery provides an exemption certificate to the registered specified air carrier delivering the fuel. Similar treatment also applies for deliveries of qualifying marine fuel between registered specified marine carriers.

Bringing or importing fuel into a listed province

Under section 19, a charge applies when a registered air or marine carrier imports fuel at a location in a listed province or brings fuel into a listed province. The charge becomes payable at the time the fuel is imported or brought into the listed province by the registered air or marine carrier. The amount of the charge is determined under section 40.

Under subsection 19(4), a charge is not payable by a registered air or marine carrier if the fuel is brought into a listed province, or is imported at a location in a listed province, in a supply tank of a vehicle and the fuel is for use in the operation of the vehicle or an auxiliary component of the vehicle (for example, the vehicle’s heater or air conditioner) or an auxiliary component of another vehicle attached to the vehicle.

Under subsection 19(5), the exception in subsection 19(4) does not apply to fuel that is brought into a listed province, or imported at a location in a listed province, by a person:

  • to the extent that the fuel is brought in or imported in a supply tank of an aircraft for use in a covered air journey in respect of the listed province, if the person is an interjurisdictional air carrier in respect of that type of fuel and is not registered as an air carrier, a marine carrier or a rail carrier for that type of fuel; or
  • to the extent that the fuel is brought in or imported in a supply tank of a vessel for use in a covered marine journey in respect of the listed province, if the person is an interjurisdictional marine carrier in respect of that type of fuel and is not registered as an air carrier, a marine carrier or a rail carrier in respect of that type of fuel.

Net fuel quantity calculation

A registered air or marine carrier or a registered specified air or marine carrier will pay a charge if the result of the calculation of the net fuel quantity (see below for details) in respect of a type of fuel and a listed province is a positive amount.

Registered air or marine carrier or registered specified air or marine carrier that is also a registered user of fuel

A registered air or marine carrier or a registered specified air or marine carrier that is also a registered user of fuel is required to comply with all the rules and obligations that apply to registered users of fuel. A registered air or marine carrier or a registered specified air or marine carrier that is also a registered user of fuel in respect of a type of fuel must pay a charge under section 23 on fuel that is used in a listed province otherwise than in a non-covered activity or delivered to another person, unless the other person is a registered distributor in respect of that type of fuel and an exemption certificate applies in respect of the delivery in accordance with section 36.

For more information, refer to Fuel Charge Notice FCN7, Users Under the Greenhouse Gas Pollution Pricing Act.

Registered air or marine carrier or registered specified air or marine carrier that is also a registered user of combustible waste

A registered air or marine carrier or a registered specified air or marine carrier that is also a registered user of combustible waste is required to comply with all the rules and obligations that apply to registered users of combustible waste. A registered air or marine carrier or a registered specified air or marine carrier that is also a registered user of combustible waste and that, at a particular time, burns combustible waste in a listed province for the purpose of producing heat or energy must pay a charge under section 25. The charge becomes payable at the particular time.

For more information, refer to Fuel Charge Notice FCN7.

Exemption certificates

An exemption certificate is a document that is provided by certain persons, including specified air or marine carriers, to another person to enable the other person to deliver fuel in a listed province without the application of the charge at the time of delivery.

A person can deliver fuel to a person that is registered as a specified air or marine carrier without a charge being applied at the time of delivery if the registered specified air or marine carrier provides an exemption certificate to the person in accordance with section 36. Specifically, an exemption certificate applies in respect of deliveries in a listed province only if the certificate includes a declaration by the person that the person is registered as a specified air carrier or a specified marine carrier in respect of that type of fuel.

To use an exemption certificate, registered specified air or marine carriers must obtain and complete Form L401-2 Fuel Charge Exemption Certificate for Registered Specified Carriers under section 36 of the Greenhouse Gas Pollution Pricing Act, and the Fuel Charge Regulations. For the purpose of the fuel charge, an exemption certificate does not have an expiry date.

The exemption certificate must be signed and provided to the person that delivers the fuel, and it can be used for subsequent deliveries made by the same person to the same registered specified air or marine carrier as long as the conditions for the exemption certificate continue to be met. The person to whom the exemption certificate is provided must retain a copy of the exemption certificate.

Section 37 sets out the consequences of making a false declaration on an exemption certificate. Where a particular person delivers fuel in a listed province to another person that provides an exemption certificate and makes a false declaration, the other person becomes liable to pay the charge otherwise payable, a penalty of 25% of the amount of the charge and any other additional penalties and interest that may be applicable. Paragraph 37(1)(c) further provides that if the particular person knows, or ought to know, that the declaration is, at that particular time, false, both the particular person and the other person are jointly and severally, or solidarily, liable for the payment of the charge in respect of the fuel and the listed province, the penalty mentioned above and any related interest and penalties.

Filing and reporting

The reporting period of a registered air or marine carrier or a registered specified air or marine carrier is a calendar month. They must file a return monthly with the CRA, even if there is no amount owing, and the return must be filed by the end of the month following the reporting period.

Forms to complete

The quantity of fuel subject to a charge must be reported by type of fuel and listed province. A registered air or marine carrier or a registered specified air or marine carrier must file Form B400, Fuel Charge Return – Registrant for each registration type and once for each reporting period, as well as:

More than one type of registration

If the registered air or marine carrier or registered specified air or marine carrier holds more than one type of registration, the quantity of fuel or combustible waste subject to a charge must be reported, by type in the case of fuel, and by listed province for each registration type. This means that the registered air or marine carrier or registered specified air or marine carrier must file Form B400 for each registration type and once for each reporting period, as well as:

Section 104 provides that a registered air or marine carrier or a registered specified air or marine carrier must keep its records for 6 years after the end of the year to which they relate.

A registered air or marine carrier or a registered specified air or marine carrier must determine the net fuel quantity of each type of fuel for each listed province for a reporting period for which a return and accompanying return schedule(s) must be filed.

Calculating net fuel quantity

Under section 30, the net fuel quantity of a person that is a registered air or marine carrier in respect of a type of fuel 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 (under section 30)
Where
A

is the total of all quantities, each of which is a quantity of fuel of that type that is:

  1. used by the person in a covered air journey in respect of the listed province during the reporting period,
  2. used by the person in a covered marine journey in respect of the listed province during the reporting period,
  3. used by the person in a locomotive in the listed province during the reporting period,
  4. used by the person in a specified commercial vehicle in the listed province during the reporting period, or
  5. removed from a supply tank of an aircraft, vessel, locomotive or specified commercial vehicle of the person in the listed province during the reporting period
B is the total of all quantities, each of which is a quantity of fuel of that type that is transferred into a supply tank of an aircraft, vessel, locomotive or specified commercial vehicle of the person at a location in the listed province during the reporting period

Under section 28, the net fuel quantity of a person that is a registered specified air or marine carrier in respect of a type of fuel 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 (under section 28)
Where
A

is the total of all quantities, each of which is a quantity of fuel of that type that is:

  1. used by the person in the listed province during the reporting period other than a quantity of fuel of that type used in the listed province:
  2. in a journey by aircraft or vessel, in a locomotive or in a specified commercial vehicle, or
  3. in a non-covered activity if the person is a registered user in respect of that type of fuel,
  4. used by the person in a covered air journey in respect of the listed province during the reporting period,
  5. used by the person in a covered marine journey in respect of the listed province during the reporting period,
  6. used by the person in a locomotive in the listed province during the reporting period,
  7. used by the person in a specified commercial vehicle in the listed province during the reporting period, or
  8. delivered in the listed province by the person to another person during the reporting period unless:
    1. the other person is a registered distributor in respect of that type of fuel and an exemption certificate applies in respect of the delivery in accordance with section 36,
    2. both persons are registered specified air carriers in respect of that type of fuel and an exemption certificate applies in respect of the delivery in accordance with section 36, or
    3. both persons are registered specified marine carriers in respect of that type of fuel and an exemption certificate applies in respect of the delivery in accordance with section 36
B

is:

  1. the total of all quantities, each of which is a prescribed quantity of fuel of that type, or a quantity of fuel of that type determined in prescribed manner, for the reporting period and the listed provinceFootnote 2, or
  2. unless paragraph (a) applies, 0

The result from the calculation of the net fuel quantity can be either positive or negative and is required to calculate the net charge of the registrant.

Under section 34, if the result of the net fuel quantity calculation of a registered air or marine carrier or a registered specified air or marine carrier for a reporting period, for a type of fuel and for a listed province is a positive amount, the registered air or marine carrier or registered specified air or marine carrier must pay a fuel charge in respect of that net fuel quantity and the listed province in the amount determined using the formula set out in subsection 40(1) and described in the section below. The charge becomes payable on the last day of the reporting period.

If the result of the net fuel quantity calculation is a negative amount, a registered air or marine carrier or a registered specified air or marine carrier can claim a rebate under section 46 in respect of that net fuel quantity, the listed province and the applicable reporting period.


Example – Net fuel quantity calculation for a registered specified air carrier


In May 2019, a registered specified air carrier provides an air transportation service with passengers and cargo from City A, which is located in a non-listed province, to City B, which is located in a listed province. The registered specified air carrier used 10,000 litres of aviation turbo fuel for the leg from City A to City B.

The registered specified air carrier refueled 1,000 litres of aviation turbo fuel in City B and used it all to travel from City B to City C, which are both within the same listed province. In City C, all passengers disembarked.

The registered specified air carrier refueled with 10,000 litres of aviation turbo fuel and picked up cargo and passengers in City C to fly to City D, which is located in a non-listed province.

The registered specified air carrier also delivered 1,000 litres of aviation turbo fuel in a listed province to a regional charter that is not a registered specified air carrier in respect of that type of fuel and is not entitled to use an exemption certificate for the delivery. As such, the aviation turbo fuel sold to the local charter included the fuel charge.

The net fuel quantity is determined using the formula A − B

where

A is 2,000 litres of aviation turbo fuel, which includes the following amounts:

  • 1,000 litres of aviation turbo fuel used for the flight from City B to City C (this flight is a covered air journey referred to in paragraph (b) of element A of the formula)
  • 1,000 litres of aviation turbo fuel delivered to the local charter in a listed province (paragraph (f) of element A of the formula)

None of the other quantities of aviation turbo fuel are covered by paragraphs (a) to (f) of element A of the formula and, as such, are not used to calculate the registered specified air carrier’s net fuel quantity.

B is 0 litres

The net fuel quantity in respect of aviation turbo fuel is 2,000 litres (2,000 litres − 0 litres).

Calculating the charge payable or the net fuel quantity rebate

For registered air or marine carriers or registered specified air or marine carriers, if the net fuel quantity result is positive, the amount of the charge is calculated using the formula under subsection 40(1). If the net fuel quantity result is negative, a rebate is calculated using the formula under subsection 46(2).

The amount of the charge payable is calculated using the formula:

A × B [under subsection 40(1)]
Where
A is the net fuel quantity
B is the rate in respect of fuel of that type for the listed province applicable at the time the charge becomes payable

The amount of the rebate is calculated using the formula:

A × B [under subsection 46(2)]
Where
A is the net fuel quantity
B is the rate in respect of fuel of that type for the listed province applicable on the last day of the reporting period

The result obtained either under subsection 40(1) or subsection 46(2) is used in the calculation of the net charge, as described in the next section.


Example – Charge payable calculation


In May 2019, a registered specified air carrier calculates its net fuel quantity in respect of aviation turbo fuel to be 2,000 litres for a listed province for that reporting period.

Because the result of the net fuel quantity calculation is a positive amount, the registered specified air carrier must pay a charge calculated using the formula A × B

where

A is 2,000 litres (the net fuel quantity)
B is $0.0516 per litre (the rate for aviation turbo fuel in the listed province during that reporting period)

The charge payable by the registered specified air carrier in respect of aviation turbo fuel for that listed province for that reporting period is $103.20 (2,000 litres × $0.0516 per litre).

Calculating the net charge

Under section 71, every person that is required to file a return must, in the return, determine the net charge for the reporting period of the person for which the return is required to be filed.

After calculating the charge(s) payable and the rebate(s)Footnote 3, if applicable, in respect of fuel or combustible waste and the listed province(s), the registered air or marine carrier or the registered specified air or marine carrier must determine the net charge for a particular reporting period.

The net charge is calculated using the following formula, which is set out in section 71:

A + B
Where
A

is the total of all amounts, each of which is the amount determined for a listed province by the formula

C − D

where

C

is the total of all amounts, each of which is a charge in respect of fuel, other than a charge under subsection 20(3), or combustible waste and the listed province that becomes payable by the person in the particular reporting period

D

is the total of all amounts, each of which is an amount of a rebate, other than a rebate for a payment in error under section 49 or a net charge rebate under subsection 71(4), in respect of the listed province payable by the CRA for a reporting period and that is claimed by the person in the return that is required to be filed under section 69 for the particular reporting period
B is 0 at this timeFootnote 4

If the net charge for a reporting period of a registered air or marine carrier or a registered specified air or marine carrier is a positive amount, the registered air or marine carrier or registered specified air or marine carrier must pay that amount to the Receiver General no later than the day on or before which the return for the reporting period is required to be filed (that is, by the end of the month following the reporting period for which the net charge becomes payable).

Interest and/or penalties may apply to late payments. For information on payment methods, go to Payments to the Canada Revenue Agency.

If the net charge for a reporting period of a registered air or marine carrier or a registered specified air or marine carrier is a negative amount, the registered air or marine carrier or registered specified air or marine carrier may claim the amount of that net charge as a net charge rebate in the return filed under section 69 for that reporting period. The rebate is payable to the registered air or marine carrier or registered specified air or marine carrier by the CRA.


Example – Net charge calculation


A registered marine carrier has a net fuel quantity with respect to light fuel oil of 3,000 litres for a reporting period for a listed province.

The registered marine carrier has also imported 3,000 litres of light fuel oil into the listed province for that reporting period, which it exports to the United States.

The charge payable in respect of the light fuel oil and the listed province is determined using the formula A × B

where

A is 6,000 litres (3,000 litres for quantity of fuel imported and 3,000 litres for the net fuel quantity)
B is $0.0537 per litre (the rate for light fuel oil in the listed province during that reporting period)

The charge payable is $322.20 (6,000 litres × $0.0537 per litre).

The rebate payable in respect of light fuel oil, the listed province and the reporting period is determined using the formula A × B

where

A is 3,000 litres (the net fuel quantity for exportation)
B is $0.0537 per litre (the rate for light fuel oil in the listed province during that reporting period)

The rebate for fuel removed from a listed province is $161.10 (3,000 litres × $0.0537 per litre).

The net charge is determined using the formula A + B

where

A is C − D

where

C is $322.20 (the charge payable by the registered marine carrier for that reporting period)

D is $161.10

B is $0

The net charge amount for the registered marine carrier for light fuel oil for that reporting period for that listed province is $161.10.

Special rules

Fuel brought into a listed province on behalf of a registered air or marine carrier or a registered specified air or marine carrier

Under section 10, when another person transports fuel into a listed province on behalf of a registered air or marine carrier or a registered specified air or marine carrier, the registered air or marine carrier or registered specified air or marine carrier, and not the person transporting the fuel, is considered to have brought the fuel into the listed province.

Similar rules apply when fuel is removed from a listed province.

Fuel in transit through a listed province

Under section 11, fuel in transit through a listed province is deemed not to have been brought into the listed province if the following conditions are met:

  • a quantity of fuel is brought into a listed province from a place in Canada in the course of the transportation of the fuel to a place outside the listed province;
  • the fuel is transported without being stored in the listed province (otherwise than in a manner that is solely incidental to the transportation); and
  • the person bringing the fuel into the listed province is a registered emitter or is registered otherwise than only as a road carrier in respect of that type of fuel.

Similar rules apply under section 12 for imported fuel that is in transit through a listed province.

Fuels in a mixture

Under section 16, a mixture of 2 or more fuels is deemed to be fuel of the type that is present in the highest proportion in the mixture. Therefore, the rate to be used when calculating the amount of the charge payable in respect of a mixture is the rate for the type of fuel present in the highest proportion in the mixture.

Biogasoline, biodiesel and biomethane

When biogasoline contained in gasoline, biodiesel contained in light fuel oil, or biomethane contained in natural gas exceeds a certain threshold, the number of litres in the case of gasoline or light fuel oil, or cubic metres in the case of marketable natural gas (MNG) or non-marketable natural gas (NMNG), is adjusted through the following formulas.

Gasoline that contains more than 10% biogasoline

Under subsection 8(5), the quantity of gasoline is calculated using the following formula:

A × (100% − B) ÷ 95%
Where
A is the number of litres that the gasoline occupies at 15°C
B is the proportion of biogasoline in the product

Example – Biogasoline


A registered air carrier has 100 litres of gasoline that contains 12% biogasoline.

The quantity of gasoline that is subject to the charge is calculated using the formula A × (100% − B) ÷ 95%

where

A is 100 litres (the number of litres that the gasoline occupies at 15°C)
B is 12% (the proportion of biogasoline)

Therefore, 100 litres × (100% − 12%) ÷ 95% equals 93 litres of gasoline.

Because the gasoline contains 12% biogasoline, only 93 of the 100 litres are subject to the charge.

Light fuel oil that contains more than 5% biodiesel

Under subsection 8(6), the quantity of light fuel oil is calculated using the formula:

A × (100% − B) ÷ 98%
Where
A is the number of litres that the light fuel oil occupies at 15°C
B is the proportion of biodiesel in the product

Example 1 – Biodiesel


A registered marine carrier has 100 litres of light fuel oil that contains 2% biodiesel.

The formula does not apply because the proportion of biodiesel contained in the quantity of light fuel oil does not exceed 5%. Therefore, the full quantity of 100 litres will be used in the calculation of the charge payable.


Example 2 – Biodiesel


A registered specified marine carrier has 100 litres of light fuel oil that contains 6% biodiesel.

The quantity of light fuel oil that is subject to the charge is calculated using the formula A × (100% − B) ÷ 98%

where

A is 100 litres (the number of litres that the light fuel oil occupies at 15°C)
B is 6% (the proportion of biodiesel)

Therefore, 100 litres × (100% − 6%) ÷ 98% equals 96 litres of light fuel oil.

Because the light fuel oil contains 6% biodiesel, only 96 of the 100 litres are subject to the charge.

Natural gas that contains biomethane

Under subsection 8(7), the quantity of MNG or NMNG is calculated using the formula:

A × (100% − B)
Where
A is the number of cubic metres that the MNG or NMNG occupies at 15°C and 101.325 kPa
B is the proportion of biomethane in the product

Example – Biomethane


A registered specified marine carrier has 100 cubic metres of MNG that contains 2% biomethane.

The quantity of MNG that is subject to the charge is calculated using the formula A × (100% − B)

where

A is 100 cubic metres (the number of cubic metres that the MNG or NMNG occupies at 15°C and 101.325 kPa)
B is 2% (the proportion of biomethane)

Therefore, 100 cubic metres × (100% − 2%) equals 98 cubic metres of MNG.

Because the MNG contains 2% biomethane, only 98 of the 100 cubic metres are subject to the charge.

Claiming a rebate

A registered air or marine carrier can claim a rebate under section 43, 46 or 49, as explained below.

A registered specified air or marine carrier can claim a rebate under section 46 or 49, as explained below.

Under section 51, a rebate will not be paid to a person at any time unless the person has filed all returns of which the CRA has knowledge and that are required to be filed on or before that time by the person under the Excise Tax Act, the Income Tax Act, the Excise Act, 2001, and the Air Travellers Security Charge Act.

Fuel removed from a listed province

Under subsection 43(1), a rebate must be paid to a person that is a registered air or marine carrier and that removes a quantity of fuel from a listed province at a particular time if, at an earlier time in a particular reporting period:

  • the person brought the quantity of fuel into the listed province from a place in Canada or imported the fuel at a location in the listed province;
  • a charge under section 19 was payable by the person at the earlier time in respect of the fuel and the listed province; and
  • that charge was taken into account in the determination of the net charge for the particular reporting period of the person.

The amount of the rebate is equal to the amount of the charge payable under section 19.

The rebate under section 43 is not to be paid in respect of a particular reporting period unless an application for a rebate is filed as part of Form B400-6 or Form B400-8 with the CRA:

  • no later than the day on or before which the return under section 69 is required to be filed for the last reporting period of the person that ends within 2 years after the end of the particular reporting period; and
  • with Form B400 in respect of the reporting period in which the amount of the rebate is taken into account in determining the net charge for the reporting period.

A registered specified air or marine carrier is not eligible to claim a rebate for fuel removed from a listed province.

Net fuel quantity rebate

A person that is a registered air or marine carrier or a registered specified air or marine carrier can claim a net fuel quantity rebate under section 46 if a net fuel quantity, determined under section 28 or 30 of the person for a reporting period, for a type of fuel and for a listed province, is a negative amount. The amount of the rebate is calculated using the formula set out in subsection 46(2) (refer to the section “Calculating the charge payable or the net fuel quantity rebate” above).

The rebate under section 46 is not to be paid in respect of a particular reporting period unless an application for a rebate is filed as part of Form B400-6, Form B400-7, Form B400-8 or Form B400-9 with the CRA:

  • no later than the day on or before which the return under section 69 is required to be filed for the last reporting period of the person that ends within 2 years after the end of the particular reporting period; and
  • with Form B400 and any related schedule in respect of the reporting period in which the amount of the rebate is taken into account in determining the net charge for the reporting period.

Payment in excess of the amount payable

Under section 49, a person may claim a rebate if it paid an amount in excess of the amount of the charge that was payable. The rebate is available whether the amount was paid by mistake or otherwise. The amount of the rebate is equal to the amount of the excess.

The rebate payable under section 49 for an amount paid in excess of the amount payable is not to be paid to a person to the extent that:

  • the amount was assessed; or
  • the amount was taken into account as an amount required to be paid for a reporting period for which the CRA had assessed the person.

This rebate is not to be included in the calculation of the net charge. Instead, a registered air or marine carrier or a registered specified air or marine carrier that intends to claim this rebate must submit an amended Form B400 and any related schedule to the CRA.

Further information

For all technical publications related to the Greenhouse Gas Pollution Pricing Act and its regulations, go to Fuel charge technical information.

To make a technical enquiry on the fuel charge or for additional information on the application of the fuel charge for each type of registrant, go to Contact Information – Excise and Specialty Tax Directorate.


Footnote 1

For more information on the OBPS, go to the Environment and Climate Change Canada (ECCC) website.

Return to footnote1 referrer

Footnote 2

Currently, there are no prescribed amounts. Therefore, B is 0 at this time.

Return to footnote2 referrer

Footnote 3

For information on the rebates that may be included in this calculation, refer to the section "Claiming a rebate” in this notice.

Return to footnote3 referrer

Footnote 4

B is the total of all amounts, each of which is a positive or negative prescribed amount. Currently, there are no prescribed amounts.

Return to footnote4 referrer


Page details

Date modified:
2019-03-29