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 Specialty Tax Directorate
Place de Ville, Tower A, 11th floor
320 Queen Street
Ottawa ON K1A 0L5
Date: November 21, 2023
Case Number: 9000111
[Client]
[Client][Client Address]
Dear [Client],
Subject: Request for interpretation for the treatment of light fuel oil containing renewable diesel under the Greenhouse Gas Pollution Pricing Act
Thank you for your letter dated October 13, 2022 regarding the application of the Greenhouse Gas Pollution Pricing Act (GGPPA) with respect to renewable diesel. We are sorry for the delay in responding to your request.
All legislative references are to the GGPPA .
We understand from your letter that you have been reporting light fuel oil quantities based on a biodiesel content of 10% (B10) while the actual product contains renewable diesel (R10). Further you point out that subsection 8(6) of the GGPPA set out a formula to reduce the quantity of light fuel oil reported that contains a proportion of biodiesel exceeding 5%.
Interpretation Requested
Is the treatment of light fuel oil with a proportion of R10 exceeding 5% subject to the same treatment as light fuel oil with a proportion of biodiesel exceeding 5% under the GGPPA?
Interpretation Given
Under subsection 8(6), if a quantity of light fuel oil contains a particular proportion of biodiesel (expressed as a percentage) that exceeds 5%, the quantity of light fuel oil is deemed, for the purpose of this Part [1], to be the number of litres determined by the formula
A × (100% – B)/98%
where
A is the number of litres that the light fuel oil would occupy at 15°C; and
B is the particular proportion.
The GGPPA does not define the term renewable diesel. There is no provision similar to subsection 8(6) of the GGPPA which contemplates light fuel oil that contains a proportion of renewable diesel exceeding 5%.
The definition of biodiesel under section 3 is as follows:
biodiesel?means
* (a) a particular substance
o (i) that is
* (A) made up of mono-alkyl esters of long chain fatty acids derived entirely from biological matter available on a renewable or recurring basis, or
* (B) made from plant or animal matter using a hydrogenation process,
o (ii) that may contain other substances, materials or things, that are not described in subparagraph (i) if the combined proportion of those other substances, materials or things does not exceed 1.5% of the particular substance, and
o (iii) that is suitable for generating power by means of a diesel engine or for use in a furnace, boiler or open flame burner when used
* (A) on its own,
* (B) after being blended with light fuel oil, or
* (C) after being blended with a light fuel oil-like blendstock to produce light fuel oil; or
* (b) a prescribed substance, material or thing.?(biodiesel)
Note: No substance, material or thing has been prescribed under (b) above
In your request for an interpretation, you supplied the Safety Data Sheet (SDS) for R10 that indicates the following:
The definition of biodiesel states that substances other than those in (a)(i) of the definition can make up a maximum of 1.5% of the particular substance. The specifications of R10 provided, show it could contain up to 2% of other substances. This is demonstrated in two ways. The first is by way of the fact that it is shown that renewable diesel makes up 98-100% of the substance. Also, the substances petroleum fuel oil and diesel fuel oil C9-20 can each appear in up to 1% of the substance. This means they could potentially total 2%. This again would exceed the 1.5% allowable amount of other substances.
Conclusion
There is no provision in the GGPPA which reduces the amount of light fuel oil subject to the fuel charge based on the amount of renewable diesel it contains. Further, if a fuel referred to as R10 does not meet the definition of biodiesel under section 3, subsection 8(6) will not apply to light fuel oil.
For these reasons, light fuel oil containing renewable diesel is subject to the rate applied to light fuel oil in schedule 2 of the GGPPA for the relevant year.
Per the CRA publication “Requesting an Excise and Specialty Tax Ruling or Interpretation”: “An interpretation is a written statement that sets out our view of how legislation applies to a generic fact situation. An interpretation is also provided when there is a clearly defined fact situation that relates to legislative provisions that have not yet become law. As such, we are not bound by the interpretation that we issue.”
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 343-551-2259.
Yours truly,
William Ferguson
Rulings Officer,
Excise Tax and Fuel Charge Division
Excise and Specialty Tax Directorate
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