A joint venture is a "person" for the purposes of the Greenhouse Gas Pollution Pricing Act. However, the CRA does not issue a business number to a joint venture. As a result, each participant in a joint venture would account for its proportionate share of the fuel charge, unless an election is made to elect a joint venture operator that accounts for the joint venture.

Joint venture operator

It is common practice for a joint venture to elect one participant to be the joint venture operator who accounts for the day-to-day operations of the joint venture. For the purpose of reporting to the CRA, the business number and program account registration of the joint venture operator is used.

To reduce the filing burden, the CRA is administratively allowing a joint venture operator to account for the fuel charge and the activities of the joint venture, on behalf of the co-venturers, through an election.

The joint venture operator must be registered for the fuel charge program. The fuel charge, and related activities, from the joint venture will be reported along with any other fuel charge liabilities of that registrant for its activities outside of the joint venture. The joint venture operator may also apply to the CRA for authority to file separate returns.

Eligibility to make this election

A joint venture election can be made if all the following conditions are met:

• The joint venture is not set up as a partnership, corporation, or trust
• The operator is a participant in the joint venture
• There is a written agreement governing the joint venture
• The operator is a registrant under the Act (however, the co-venturers do not have to be a registrant under the Act to make this election).

Participant in a joint venture means either of the following:

• a person who, under a written joint venture agreement, makes an investment by contributing resources and takes a proportionate share of any revenue or incurs a proportionate share of the losses from the joint venture activities
• a person, without a financial interest, who is designated as the operator of the joint venture under a written agreement and is responsible for the managerial or operational control of the joint venture.

How to make this election

The operator and co-venturers of a joint venture can make an election at any time during the life of the joint venture. The election remains in effect until any of the eligibility conditions are no longer met, or until the operator and co-venturers jointly revoke the election. The election can be made by filling out Form L406, Election or Revocation of an Election to Have the Joint Venture Operator Account for the Fuel Charge.

Co-venturers that do not make this election generally have to account for their share of the fuel charge.

The effect of the election

When the election is in effect, the operator is considered to have charged the fuel charge on all non-exempt fuel deliveries, and paid the fuel charge on all activities for which a fuel charge is payable, on behalf of the co-venturers in joint venture activities. The operator is responsible to account, report, and pay for that fuel charge to the CRA.

All electing participants – operator and co-venturers – are jointly and severally liable for all fuel charge obligations related to any activities the operator performs on behalf of the electing co-venturers under the joint venture agreement. Anything done by the participant in a joint venture, or by the operator, in the course of the activities for which the joint venture agreement was entered into are deemed to have been done by the joint venture in the course of those activities, and not to have been done by the participant or the operator.

The election applies only to activities the operator conducts on behalf of the joint venture.

Records

Do not send Form L406 to the CRA. The operator and co-venturers must keep the election form, or copies, on file in case CRA asks to see it.

The operator has to keep the election as it relates to all co-venturers over the life of the joint venture.

Each co-venturer has to keep the election that reflects its own status at any time during its involvement with the joint venture.

For more information

To request a ruling or interpretation or to make a technical enquiry on the application of the fuel charge, contact one of the regional excise offices listed at Contact Information – Excise Duties, Excise Taxes, Fuel Charge and Air Travellers Security Charge.