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 GST/HST Rulings Directorate
Place de Ville, Tower A, 11th floor
320 Queen Street
Ottawa ON K1A 0L5
[Client]
[Company A]
[Company A’s address]
Case Number: 9000189
August 15, 2023
Dear [Client],
Subject: FUEL CHARGE INTERPRETATION
Thank you for your letter of[mm/dd/yyyy], concerning the application of section 36 of the Greenhouse Gas Pollution Pricing Act (Act) to fuel delivered to a farmer.
All legislative references are to the Greenhouse Gas Pollution Pricing Act (GGPPA) and the regulations therein, unless otherwise specified.
STATEMENT OF FACTS
We understand that a fuel charge audit on[Company A]’s registered distributor account [#] was performed for the period from [mm/dd/yyyy] to[mm/dd/yyyy].
The audit resulted in a total adjustment of $[…] for non-compliance under subsection 17(1) of the Act, where the fuel charge was not paid on the deliveries of qualifying farming fuels (i.e. light fuel oil and gasoline) over the period to your client, [Company B], a company in the business of bulk fuel distribution to clients locally such as farmers.
The following information was retrieved from the above-mentioned audit:
* During a phone conversation with the auditor on[mm/dd/yyyy], you indicated that you were aware that [Company B]was not a registered distributor of light fuel oil nor gasoline, and that you advised this client to register at multiple occasions.
* As of[mm/dd/yyyy], [Company B](also self-identified as […]) filed and provided two (2) exemption certificates to you both signed by the owner:
1. L401 & L401-1 – Fuel Charge Exemption Certificate & Schedule : Registered distributor for light fuel oil and gasoline [Province]
2. L402 : Fuel Charge Exemption Certificate for Farmers [Province]
* Signed on[mm/dd/yyyy], you prepared a written agreement titled […] (Agreement) with [Company B] that was signed by both parties on[mm/dd/yyyy]. This agreement describes the role and responsibilities of both parties to collect and remit (i.e. pay to the CRA) the fuel charge, and stipulates the following:
1. For deliveries of dyed light fuel oil and dyed gasoline to[Company B], which are intended to be sold and delivered subsequently to farmers by[Company B], [Company A]will not pay to the CRA the fuel charge applicable.
* [Company B]should indicate on the bill of lading the fuel charge exemption on those subsequent deliveries of dyed qualifying farming fuel to farmers
2. The fuel charge will be paid on all other deliveries of fuel made in a listed province by [Company A]to[Company B].
INTERPRETATION REQUESTED
You would like to know if you are permitted to deliver dyed qualifying farming fuels to [Company B]without paying the fuel charge on those deliveries made during the audit period.
Also, you would like to know if farmers can purchase qualifying farming fuel from [Company B]without the fuel charge applied/imbedded, if those farmers provide a valid exemption certificate (L402) to[Company B].
In the event that both inquiries above are unfavourable, you would like to know if fuel charge relief can be applied on deliveries made to you, if this fuel is then delivered to [Company B]and qualifying farming fuel would be subsequently sold exempted to its farm clients.
INTERPRETATION GIVEN
With respect to subsection 17(2) of the Act, the fuel charge payable under subsection 17(1) does not apply when the fuel is delivered by a registered distributor to another registered distributor in respect of that type of fuel, and the other registered distributor provides an exemption certificate in accordance with section 36 to the registered distributor supplier. When the conditions listed under subsection 17(2) are not met, the registered distributor must pay (i.e. remit to the CRA) the fuel charge in accordance with subsection 17(1) of the Act. No provision in the Act nor the Regulations allow a registered distributor to derogate from their obligations by means of an agreement with another person.
Once the fuel charge has been paid by a registered distributor, an exemption certificate cannot apply to future deliveries by the subsequent distributor, even to a farmer who provides an exemption certificate to a distributor who is not a registered distributor in respect of the type of fuel. In other words, subsection 17(2) of the Act cannot apply for deliveries of qualifying farming fuel (i.e. light fuel oil and gasoline) to a farmer by a person who is not registered as a distributor in respect of those types of fuel.
Therefore, as [Company B]is not registered as a distributor of qualifying farming fuel, the fuel charge is payable on all fuel deliveries made to them (i.e. fuel made available to your client), even if that fuel is subsequently sold to farmers. Also, there are no provisions in the Act or the regulations to relieve the fuel charge on deliveries made to [Company B]when [Company B]subsequently delivers fuel to a farmer who has provided an exemption certificate.
In accordance with the qualifications and guidelines set out in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service, the Canada Revenue Agency (CRA) is bound by the ruling(s) given in this letter provided that: none of the issues discussed in the ruling(s) are currently under audit, objection, or appeal; no future changes to the type in relevant legislation, regulations or the CRA’s interpretative policy affect its validity; and all relevant facts and transactions have been fully and accurately disclosed.
For your convenience, find enclosed a copy of GST/HST Memorandum 1.4, Goods and Services Tax Rulings.
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 438-334-7151.
Yours truly,
Angelique St-Pierre
Rulings officer
Fuel Charge Unit
Excise Tax and Fuel Charge Division
Excise and Specialty Tax Directorate
cc:
Enc.