Canadian FUEL and CARBON taxes

There are two major regimens for taxes on the consumption of carbon-based fuels:

Fuel Taxes:


PFT - Provincial Fuel Taxes
FET - Federal Excise Taxes

Carbon Taxes:

CT – Carbon Taxes, at a provincial level
FFC – Federal Fuel Charge



FUEL TAX

Fuel tax is a per litre charge on fuels used to power internal combustion engines (e.g. cars, boats, airplanes, stationary engines, etc.). Refiners and wholesalers are required remit fuel tax returns to the provincial and federal governments specifying the imports, acquisitions, dispositions, and exports of fuel within a province or territory. The purchase of fuel, tax-included, and the recovery of the fuel tax when the fuel is resold, continues until the fuel is sold to the end consumer. 


Provincial Fuel Tax: Each province and territories have unique sets of requirements for remitting fuel taxes.


Federal Excise Tax: A federal fuel tax is levied in addition to the provincial fuel tax. This tax is also a per litre charge. Considerations in addition to the fuel taxes:



CARBON TAX


Carbon tax is a levy imposed on burning carbon-based fuels. Typically fuel producers and distributers will pay an amount based on each ton of carbon dioxide emitted. Carbon tax is not applied to energy sources that don't release carbon pollution. A new federal mandate requires each province and region to have a carbon tax in place. The Federal Fuel charge applies to provinces and territories that currently do not have their own carbon tax. They are Manitoba, New Brunswick, Ontario, Saskatchewan and on July 1st Yukon and Nunavut will be added.  

Federal Fuel Charge: The Federal Fuel Charge is a carbon pollution charge that is composed of the fuel charge that is generated from burning fossil fuels.

Implemented by the Government of Canada as of April 1, 2019 the federal greenhouse gas emissions pricing system.
Producers, distributors, emitters, importers, and people in air, marine, rail and road carriers should become familiar with the regulations and register for this carbon pollution pricing system

Provincial carbon taxes: Quebec, British Columbia and Alberta have carbon tax regimens in place. Each are quite different and favour specific industries and parties.



CONSIDERATIONS FOR YOUR BUSINESS

Commodity taxes are subject to change on a provincial and federal government level and are subject to yearly changes. Small changes in the law can have outsized impacts on industry and non-compliance can be very expensive. Monthly remittances can incur steep penalties if not filed on time. Further, as fuel and carbon taxes expand governments are conducting more audits to scrutinize returns which increases the risk of interest and penalties if companies are not in compliance.

Our professionals have extensive experience with both the compliance and advisory components of the fuel tax for each jurisdiction and level of government in Canada.

Provincial Fuel and Carbon Tax: Each province and territories have unique sets of requirements for remitting fuel taxes. Key considerations at a provincial level:

Are you a large producer or a small producer?
Are you selling to first nation customers?
Are you using or reselling propane?
Will you be selling fuel in the Victoria and/or Vancouver region?
Will you be selling fuel to bordering Ontario or NB?
Are you selling to exempt customers?
What's the difference between exemptions and permits?
Will your company be consuming or reselling dyed fuels?
What exemptions do you need from your customers to sell this fuel?
Will your company be selling to shipping and/or fishing vessels?

Federal Excise Tax and Federal Fuel Charge:

Are you eligible for a W license?
Will you be using this fuel for heating a structure?
Are you selling to farmers?
Are you selling to oil and gas customers?


LITVIN MUIR CAN HELP

Advisory: Have a question about fuel and carbon taxes? Our professionals are excited to help you and your business develop and maintain compliance. With exposure in all jurisdictions in Canada our professionals are experienced in analyzing issues, researching legislation, and providing the appropriate solution for your compliance needs.

Registration: Our professionals can determine which registrations are required and complete the registrations on your behalf. Understanding the various categorizations and registration requirements for the numerous fuel taxes are not always as clear cut as some may expect.

Returns: Not sure where to start? Our professionals have extensive experience compiling and completing fuel tax returns. We can prepare, complete, and send off your returns to ensure you and your company can focus on growth, not taxes.

Exemption Management: Do you know if your business is eligible for exemptions on the purchase of fuel? Are you selling to exempt customers? Do you need help managing the intricate web of exemptions both for your business and your customers? We can help with ensure your business is in compliance and take off the burden of maintaining all the exemptions you and/or your customers are entitled to.

 


 

Fuel Taxes

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