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.
[Addressee]
Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 20th floor
320 Queen Street
Ottawa ON K1A 0L5
Case Number: 127347
November 25, 2010
Dear [Client]:
Subject:
EXCISE RULING
Application of excise tax on [...] [Petroleum-based Product]
Thank you for your letter that was received by the CRA on August 19, 2010 concerning the application of excise tax on [...] [Petroleum-based Product] ([the Product]).
All legislative references are to the Excise Tax Act (ETA) and the regulations there under, unless otherwise specified.
Statement of Facts
We understand that [the Product] is a solvent and is obtained from a petroleum origin.
It is being marketed as a solvent for use in drilling fluid for oil and gas well drilling in Western Canada.
Specifications of [the Product] exceed 500 ppm, sulphur content.
[The Product] although suitable for heating oil applications will also not be used in that application.
Ruling Requested
You would like to know the application of excise tax on [the Product].
Ruling Given
Based on the facts set out above, we rule that [the Product] meets the definition of diesel fuel and is subject to excise tax under the ETA.
This ruling is subject to the qualifications in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service. We are bound by this ruling provided that none of the above issues are currently under audit, objection, or appeal, that no future changes to the ETA, regulations or our interpretative policy affect its validity, and all relevant facts and transactions have been fully disclosed.
Explanation
Diesel fuel in the Act is defined to include "any fuel oil that is suitable for use in internal combustion engines of the compression-ignition type, other than any such fuel oil that is intended for use and is actually used as heating oil".
Unless the fuel oil is intended for use and is actually used as heating oil, any fuel oil that is suitable for use in internal combustion engines of the compression-ignition type meets the definition of diesel fuel.
You mentioned in your letter that the fuel will not be used as heating oil.
The Act does not distinguish whether the fuel oil is actually used in internal combustion engines of the compression-ignition type or not. As long as the fuel oil is suitable for that use, it meets the definition of diesel fuel.
In your case, you mentioned that [the Product] has a sulphur content that exceeds 500ppm.
The Sulphur in Diesel Fuel Regulations limit the content of sulphur in diesel to 500 mg/kg in certain circumstances and 15 in others.
Even though the content of sulphur is legislated to contents of 500 ppm or less, fuel oil with sulphur content of more than 500 ppm can still be suitable for use in diesel engines.
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 613-957-4138.
Yours truly,
Nathalie Robitaille
Excise Taxes and Other Levies Unit
Excise Duties and Taxes Division Division
Excise and GST/HST Rulings Directorate
UNCLASSIFIED
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