Refund of Federal Excise Tax for Goods Purchased or Imported by the Provinces of Alberta or New Brunswick

February 2022

This version replaces the one dated December 2021. This notice was updated to include links to Form RC230, Federal Excise Tax Exemption Certificate for Goods Purchased by a Province, and Form RC234, Election or Revocation of an Election to Allow a Dealer to Claim Refunds of Federal Excise Tax on Goods Purchased or Imported by a Province.

All statutory references in this publication are to the provisions of the Excise Tax Act and all further references to province are to Alberta and/or New Brunswick.

If this information does not completely address your particular situation, you may wish to call 1‑866‑330‑3304 for additional information.

Any commentary in this publication should not be taken as a statement by the CRA that the proposed amendment will be enacted in its current form.

Table of Contents

• Overview
• Making an election
• Exemption certificate
• Ineligible purposes
• Applying for a refund
  • As a province
  • As a dealer

Overview

Section 68.19 relieves provinces from the federal excise tax on motive fuels, fuel-inefficient vehicles and automotive air conditioners that they purchase or import for the province’s own use, under certain circumstances. If excise tax has been paid on these goods, the province that purchased or imported the goods may claim a refund equal to the amount of the tax. Alternatively, the dealer (that is, the importer, transferee, manufacturer, producer, wholesaler, jobber or other dealer) may claim the refund, if the province provided an exemption certificate stating that it is purchasing goods that meet the requirements for exemption from the excise tax and the dealer sold the goods to the province without embedding the excise tax in the price.

Budget 2021 proposes to amend section 68.19 to clarify that only the province that purchased or imported the goods may claim refunds of excise tax unless the province and the dealer jointly make an election designating that the dealer of the goods be entitled to claim the refunds. The new measure would apply to goods purchased or imported by a province on or after January 1, 2022.

Making an election

To make an election, a province and a dealer would have to jointly complete and sign Form RC234, Election or Revocation of an Election to Allow a Dealer to Claim Refunds of Federal Excise Tax on Goods Purchased or Imported by a Province. The election would entitle that dealer to claim refunds of excise tax for the goods it sold to the province without embedding the excise tax in the price. A province may make an election with each of its dealers; however, only one election under proposed subsection 68.19(1.2) may be made by a province in respect of a particular purchase or importation of goods.

The election would be effective for the period that the dealer and the province specify on Form RC234 or until it is revoked. The province and the dealer may also use Form RC234 to jointly revoke an existing election as of the date of signature or a later date. 

Alberta and New Brunswick are the only provinces that may make this election as they do not have a reciprocal taxation agreement with the Government of Canada. A joint election should not be made if the excise tax is embedded in the price of the goods purchased or imported by the province.

Exemption certificate

An exemption certificate would continue to be required in order for a province to purchase goods from a dealer without the excise tax being payable. An exemption certificate is a document in which a province attests to a dealer that it is purchasing goods that meet the requirements for exemption from excise tax. To be relieved from the excise tax, a province must not purchase or import goods for any of the ineligible purposes identified under section 68.19. Refer to the “Ineligible purposes” section of this notice for more information.

In addition to the election, a province would have to provide an exemption certificate to the dealer at the time of purchase. The dealer will use the exemption certificate to support an application for refund of excise tax.

The exemption certificate must be duly signed and dated by a person authorized by the province and include all of the following information:

• the name, account number (or business number) and mailing address of the province purchasing the goods
• the name, account number (or business number) and mailing address of the dealer selling the goods to the province
• the type and quantity of goods being purchased
• the date of purchase
• the attestation that the province is not purchasing goods for any of the ineligible purposes described in the next section of this notice

The CRA recommends that provinces use Form RC230, Federal Excise Tax Exemption Certificate for Goods Purchased by a Province, for this purpose.

No exemption certificate should be provided to the dealer if the excise tax is embedded in the price of the goods purchased by the province.

Ineligible purposes

Under section 68.19, a province is not exempt from excise tax and a refund of excise tax cannot be claimed on goods purchased or imported by the province if any of the following situations apply:

• the goods are purchased or imported by the province for resale
• the goods are purchased or imported by the province for use by any board, commission, railway, public utility, university, manufactory, company or agency owned, controlled or operated by the government of the province or under the authority of the legislature or the lieutenant governor in council of the province
• the goods are purchased or imported by the province for use by the province, or by any of its agents or servants, in connection with the manufacture or production of goods or use for other commercial or mercantile purposes

Applying for a refund

As a province

To apply for a refund, a province must complete Form N15, Excise Tax Act - Application for Refund/Rebate, and submit it to the CRA within two years after it purchased or imported the goods. No election should be made with the dealer in respect of the goods purchased or imported for which the province would like to claim a refund of excise tax.

Proper documentary evidence to support the claim must be made available to the CRA upon request.

As a dealer

To apply for a refund, a dealer must complete Form N15 and submit it to the CRA within two years after the province purchased or imported the goods.

An election would be required for a dealer to be eligible to claim refunds of excise tax on goods purchased or imported by a province on or after January 1, 2022. The dealer and the province would have to jointly complete and sign Form RC234 no later than the date of purchase or importation in order for the dealer to be entitled to claim refunds.

The dealer would also have to obtain an exemption certificate (such as Form RC230) from the province at the time of purchase or importation for the goods described in the refund application.

Proper documentary evidence to support the claim must be made available to the CRA upon request.

Further information