Please note that the following document, although correct at the time of issue, may not represent the current position of the Agency. / Veuillez prendre note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'Agence.
Excise and GST/HST Rulings Directorate
20th Floor, Place de Ville, Tower A
320 Queen Street
Ottawa, ON K1A 0L5
XXXXX
XXXXX
XXXXX
XXXXX
Case Number: 104312
Attention: XXXXX
July 14, 2008
Subject:
_Excise Interpretation
Federal Excise Tax on Fuel
Dear Sir:
Thank you for your letter of XXXXX concerning the application of the Excise Tax Act (ETA) to the Federal Excise Tax on Fuel.
The legislative references are to the ETA and the regulations therein, unless otherwise specified.
Statement of Facts
1. XXXXX is a XXXXX company;
2. XXXXX finances the fuel purchases of its clients and then re-bills them on a monthly basis in a summary invoice;
3. XXXXX may include provincial government departments as clients in XXXXX;
4. XXXXX cannot bill its XXXXX provincial government clients the excise tax if they are excise tax exempt; and
5. XXXXX purchases excise tax paid fuel from its suppliers.
Interpretation Requested
You would like to know:
(1) Which provinces get Federal Excise Tax exemption on their fuel uses?
(2) How can XXXXX claim an excise tax refund when they pay excise tax to their fuel suppliers but cannot charge their provincial government clients; and
(3) Could XXXXX use Form N15 - Application for Refund/Deduction of Excise Taxes, supported with the XXXXX and detailed fuel purchase records to claim their excise tax refund?
Interpretation Given
Under section 23, an excise tax is imposed, levied and collected on the sale of gasoline produced or manufactured in Canada or imported into Canada.
Under section 125 of the Constitution Act, 1867, the federal and provincial governments are immune to taxation imposed by each other unless the two levels of government agree to pay the taxes imposed by the other, typically by way of a reciprocal taxation agreement.
In reply to your questions:
(1) Alberta and New Brunswick are the only provinces that do not have a reciprocal taxation agreement with the federal government. They are, therefore, exempt from the payment of the federal excise tax on fuel.
You may sell fuel to these provincial governments exempt of the excise tax if the purchase is for any purpose other than that specified in subsection 68.19(1) of the ETA as follows:
(a) resale,
(b) use by any board, commission, railway, public utility, university, manufactory, company or agency owned, controlled or operated by the government of the province or under the authority of the legislature or the lieutenant governor in council of the province, or
(c) use by Her Majesty in that right, or any agents or servants of Her Majesty in that right, in connection with the manufacture or production of goods or use for other commercial or mercantile purposes.
(2) XXXXX is entitled to claim a refund for the excise tax paid on fuel that is subsequently sold exempt to the provinces of Alberta and New Brunswick as per paragraph 68.2(1).
(3) XXXXX would be eligible to file Form N15, "Application for Refund/Deduction of Excise Taxes" with the Canada Revenue Agency for the excise tax paid on the fuel that was sold exempt provided that the refund application is submitted within two years of the sale.
All of the remaining provinces have reciprocal taxation agreements with the federal government and are required to pay the excise tax on their fuel purchases. They are unable to claim refunds for this excise tax paid fuel as per paragraph 68.19(2).
The foregoing comments represent our general views with respect to the subject matter of your request. These comments are not rulings and, in accordance with the guidelines set out in GST/HST Memorandum 1.4, Goods and Services Tax Rulings, do not bind the Canada Revenue Agency with respect to a particular situation. Future changes to the ETA, or our interpretative policy could affect this interpretation.
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at (613) 954-4132.
Yours truly,
Joan Thompson
Rulings Officer
Excise Taxes and Other Levies
Excise Duties and Taxes Division
UNCLASSIFIED
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