Carbon pollution pricing – what you need to know

The Government of Canada introduced a federal carbon pollution pricing system as part of its plan to implement a federal greenhouse gas emissions pricing structure.

The Greenhouse Gas Pollution Pricing Act (the Act), which implements the federal carbon pollution pricing system, received Royal Assent on June 21, 2018 and is composed of two key parts. Part 1, administered by the Canada Revenue Agency (CRA), provides for 12 types of registrations and applies a fuel charge on 21 types of fuel and combustible waste. Part 2, administered by Environment and Climate Change Canada, introduces an output-based pricing system (OBPS) for industrial facilities.

Part 1 of the federal system (the fuel charge) began to apply in Saskatchewan, Manitoba, and Ontario and New Brunswick^{Footnote 1} on April 1, 2019, and in Nunavut and Yukon on July 1, 2019. It began to apply in Alberta on January 1, 2020. These provinces and territories are known as

To make sure your business is up-to-date on the fuel charge, use our Get registered for the New CRA Fuel Charge Program information sheet (PDF).

Registration

Businesses with certain activities in a listed province can register with the CRA to ensure they fulfill their obligations under Part 1 of the Act. There are 12 types of registration, which can be mandatory or voluntary depending the type of activities you perform.

Mandatory registration

Businesses that have activities in a listed province, such as fuel producers, distributors, importers, or certain users of combustible waste, as well as persons that are air, marine, rail or road carriers, may have to apply for registration with the CRA for purposes of the fuel charge.

Registration was required before April 1, 2019 for business activities in Saskatchewan, Manitoba, and Ontario and New Brunswick^{Footnote 1} and before July 1, 2019 for business activities in Nunavut or Yukon. If a business has activities in Alberta, it was required to register before January 1, 2020.

Voluntary registration

In some circumstances, registration as distributors, importers, emitters, users of fuel, or specified carriers is voluntary.

To find out if you are required or permitted to register, see Fuel Charge Notice FCN1, Registration Under the Greenhouse Gas Pollution Pricing Act.

Get an exemption certificate

Certain businesses may be eligible to use an exemption certificate. Where applicable, this certificate will allow them to accept the delivery of fuel without the application of the fuel charge at that time.

How the charge applies

Generally, a charge applies on 21 types of fuel delivered, transferred, used, produced, imported or brought into a listed province. It also applies on combustible waste that is burned, such as tires and asphalt shingles, in a listed province, for the purpose of producing heat or energy.

In most cases, the charge applies early in the supply chain and is payable by a registered distributor. End users generally have no obligations in respect of the fuel charge. The fuel that they purchase will already have the charge embedded in the price.

What happens to inventory

Persons that are holding inventories of fuel in a listed province, on April 1, may be required to pay a charge on fuel held in the listed province in accordance with the Act.

For more information, visit Charge on fuel held in a listed province on adjustment day.

If you’re a…

Road carrier

Generally, a road carrier is required to register if it has business activities that are interjurisdictional, for fuel that is gasoline, light fuel oil (diesel fuel), marketable natural gas, or propane if the person uses fuel of that type in a specified commercial vehicle in a listed province. The general rules for registration and the application of the fuel charge are similar to those under the International Fuel Tax Association Inc. (IFTA) for road carriers. A road carrier that has business activities only within a listed province will not have to register with the CRA for purposes of the fuel charge. For example, a road carrier that transports goods only within the boundaries of a listed province will not have to register.

For more information, visit FCN6, Road Carriers Under the Greenhouse Gas Pollution Pricing Act.

Farmer

Farmers do not have to register for the fuel charge with the CRA. Under the Act, farmers may be able to use an exemption certificate and benefit from relief of the fuel charge in specific circumstances. For example, a registered distributor may deliver gasoline or light fuel oil (diesel fuel) to a farmer at a farm in a listed province without the charge being payable at that time as long as the gasoline or light fuel oil is for use in the course of eligible farming activities and the farmer provides an exemption certificate to the registered distributor in accordance with the Act.

The farmer may also benefit from relief of the fuel charge by using an exemption certificate if the fuel is delivered to the farmer through a cardlock and the cardlock operator is registered as a distributor, and the farmer provides the exemption certificate to the operator in accordance with the Act.

Fisher

Fishers do not have to register for the fuel charge with the CRA. Under the Act, fishers may be able to use an exemption certificate and benefit from relief of the fuel charge in specific circumstances. For example, a registered distributor may deliver gasoline or light fuel oil (diesel fuel) to a fisher in a listed province without the charge being payable at that time as long as the gasoline or light fuel oil is for use in the course of eligible fishing activities and the fisher provides an exemption certificate to the registered distributor in accordance with the Act.

Greenhouse operator

Greenhouse operators do not have to register for the fuel charge with the CRA. Greenhouse operators may be able to use an exemption certificate and benefit from partial relief of the fuel charge for marketable natural gas and propane in specific circumstances. More information on greenhouse operators can be found in FCN10, Regulations Amending the Fuel Charge Regulations Made Under the Greenhouse Gas Pollution Pricing Act.

Remote power plant operator that generates electricity for remote communities

Remote power plant operators that generate electricity for remote communities would not have to register for the fuel charge with the CRA. Remote power plant operators can use an exemption certificate and benefit from relief of the fuel charge in specific circumstances. More information on remote power plant operators can be found in FCN10, Regulations Amending the Fuel Charge Regulations Made Under the Greenhouse Gas Pollution Pricing Act.

Reporting your charges

Most fuel charge registrants will have monthly reporting periods with the CRA. A person, who is registered as a road carrier, will report on a quarterly basis. Even if you are not registered, such as a farmer, a fisher, a greenhouse operator or a remote power plant operator, you may be required to report the fuel charge. For more information, visit Report the fuel charge.

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