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
5th floor, Place de Ville, 320 Queen Street
Ottawa ON K1A 0L5
[Client addressee]
Case Number: 9000278
Business Number: […]
Attention: [Client]
July 16, 2024
Dear [Client]
Subject: FUEL CHARGE INTERPRETATION – Eligibility for a Rebate of the Fuel Charge
Thank you for your letters of [mm/dd/yyyy], [mm/dd/yyyy], and [mm/dd/yyyy], concerning [client] eligibility for a rebate of the fuel charge.
All legislative references are to the Greenhouse Gas Pollution Pricing Act (the Act) and the regulations therein, unless otherwise specified. Please note that, while the term “federal carbon tax” is commonly used as a synonym, we will use the term “fuel charge” for technical accuracy.
We understand the following from your letters and our subsequent telephone conversations:
* Part of [client]’s business activities in the listed province of [province] includes equipment rentals to industrial sites across […]Canada. This service also includes the ongoing supply of gasoline and light fuel oil (collectively referred to as the fuels) required in the leased equipment.
* [Customer] is a registered emitter under the Act. [Client] leases equipment to [customer], and supplies the fuels used in the equipment. The equipment is for use on [the customer]’s covered facility in [province].
* [Client] arranges delivery of the fuels it purchases from [fuel supplier] who is registered as a distributor of those fuels for purposes of the fuel charge.
* [Fuel supplier] transports the fuels to [customer]’s covered facility on behalf of [client].
* [Client] is not a registered distributor of those fuels for purposes of the fuel charge.
* The fuel charge is embedded in the invoices issued to [client] by [fuel supplier], as per the copy of “Charge Sale” you provided.
* Page 3 of the [mm/yyyy] “[Fuel supplier’s] Credit on Account Agreement” (the Agreement) you have provided states that [client], the account holder, is liable to pay for all charges to its [fuel supplier] account, including those from authorized users and purchasers.
* A purchase invoice from [fuel supplier] for quantities of light fuel oil delivered on [mm/dd/yyyy], shows that:
o the fuel charge applied on these fuel deliveries;
o the fuels were sold and delivered to [client]; and
o the fuels were delivered by [another supplier]on behalf of [fuel supplier].
* [Customer] is unwilling to pay the cost of the embedded fuel charge as they are a registered emitter eligible to use form L401-1, Fuel Charge Exemption Certificate for Registered Emitters
o You provided a signed copy of form L401-1 issued by [customer]
* The subsequent sales invoice you provided from [client] to [customer] shows that no fuel charge applied on those deliveries of light fuel oil previously purchased from [fuel supplier].
INTERPRETATION REQUESTED
You would like to know if [client] is entitled to a rebate of the fuel charge embedded in the price of gasoline and light fuel oil that it purchased from a registered distributor in a listed province, who transported and delivered the fuels on [client]’s behalf to a registered emitter in the same listed province.
INTERPRETATION GIVEN
Under subsection 17(1) of the Act, a registered distributor must pay (i.e. remit to the Canada Revenue Agency(CRA)) the fuel charge on all deliveries of a type of fuel in a listed province that are made to another person, unless a delivery is subject to an exemption certificate under section 36.
In order for a delivery of fuel to be exempted from the fuel charge under subsection 17(1) of the Act, a person receiving the fuel must be listed under paragraph 17(2)(a) and must provide an exemption certificate in accordance with the conditions outlined under section 36. As [client] is not a person listed under paragraph 17(2)(a), [client] cannot obtain fuel exempt of the fuel charge.
The fuel charge paid by [fuel supplier] to the CRA on deliveries to [client] becomes an embedded cost in the fuel for future deliveries. There is no rebate provision in the Act nor the regulations that would be applicable to [client]’s circumstance as outlined.
Subject to the conditions outlined under section 36 of the Act, a registered emitter must provide a completed form L401-1 Fuel Charge Exemption Certificate for Registered Emitters of Users of Fuel to a registered distributor of a type of fuel to acquire that fuel exempt of the fuel charge in a listed province. As [client] is not a registered distributor of light fuel oil or gasoline, [client] cannot provide an exemption of the fuel charge to [customer] on the delivery of those fuels.
To avoid incurring the fuel charge as an intermediate fuel reseller, a person is permitted to register as a distributor for a given type of fuel if it carries on the business of selling, delivering or distributing fuel of that type in the ordinary course of business in a listed province to a person listed under paragraph 55(3)(a) of the Act. For more information on this matter, please read FCN2 – Distributors Under the Greenhouse Gas Pollution Pricing Act, available at canada.ca/en/revenue-agency/services/tax/technical-information/fuel-charge-notices.
The interpretation given in this letter, including any additional information, is not a ruling and does not bind the CRA with respect to a particular situation. Future changes to the Act, regulations, or the CRA’s interpretative policy could affect the interpretations or the additional information provided herein. For further information see the publication “Requesting an Excise and Specialty Tax Ruling or Interpretation”.
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 438-334-7151.
Sincerely,
Angelique St-Pierre
Senior Rulings officer
Fuel Charge Unit
Excise Tax and Fuel Charge Division
Excise and Specialty Tax Directorate
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