FCN3 Annual Charge on Fuel Held in a Listed Province on Adjustment Day

March 2019

The purpose of this notice is to provide information to persons that are holding fuel in one of the proposed listed provinces of Manitoba, New Brunswick, Ontario, Saskatchewan, Nunavut and Yukon at the beginning of an adjustment day and that may be required to pay a charge under section 38 of the Greenhouse Gas Pollution Pricing Act.

The first proposed adjustment day is April 1, 2019, for fuel held in the proposed listed provinces of Manitoba, New Brunswick, Ontario and Saskatchewan and July 1, 2019, for fuel held in the proposed listed provinces of Nunavut and Yukon. Subsequent proposed adjustment days for all proposed listed provinces are April 1, 2020; April 1, 2021; and April 1, 2022.

Unless otherwise excluded, every person that holds fuel (other than in a supply tank of a vehicle) in a proposed listed province at the beginning of an adjustment day and that is, or that can reasonably be expected to be, liable to pay a charge must determine the quantity of fuel held in the proposed listed province by that person at the beginning of the adjustment day.

Such persons should carefully review the information contained in this notice since a clear understanding of the legislative provisions is key to remaining compliant with the Act.

The information in this notice is for reference purposes only and does not replace the Greenhouse Gas Pollution Pricing Act or its regulations. The information described in this notice is also based, in part, on the Draft Regulations Amending Part 1 of Schedule 1 and Schedule 2 to the Greenhouse Gas Pollution Pricing Act. The Draft Regulations were included as an attachment to the news release entitled Department of Finance Announcing Climate Action Incentive Payments and Launch of Fuel Charge Consultations, that was issued on October 23, 2018. Any reference that is made in this notice to April 1, 2019 or July 1, 2019 is as proposed in the Draft Regulations. Any reference that is made in this notice to a particular listed province refers to Manitoba, New Brunswick, Nunavut, Ontario, Saskatchewan and Yukon, as proposed in the Draft Regulations. Any commentary contained in this notice should not be taken as a representation by the Canada Revenue Agency (CRA) that the Draft Regulations will eventually be made in their current form.

Should there be any discrepancy between the information in this notice and the legislative provisions in the Act or its regulations, the legislative provisions apply. For more information about the Act and its regulations, including all related technical publications, go to Fuel charge technical information.

All legislative references in this publication are to the Act, unless otherwise specified.

Table of Contents

Overview

As part of the Government of Canada’s initiative to implement a federal carbon pollution pricing system, and taking into consideration provincial carbon pollution pricing systems, the Government of Canada has developed a federal carbon pollution pricing system composed of a fuel charge that applies to fossil fuels and an output-based pricing system (OBPS) for industrial facilities.Footnote 1

The federal system applies in provinces and territories where a provincial or territorial carbon pollution pricing system has not been put into place or the system does not meet the federal standard. The Canada Revenue Agency (CRA) will be responsible for administering and enforcing the fuel charge component of the federal system beginning April 1, 2019, as proposed, for the proposed listed provinces of Manitoba, New Brunswick, Ontario and Saskatchewan and July 1, 2019, as proposed, for the proposed listed provinces of Nunavut and Yukon (the listed provinces). For the applicable rates of the charge on the various fuel types and combustible waste, go to Fuel Charge Rates.

This notice provides information on the charge that applies to fuel held in a listed province at the beginning of an adjustment day, as well as reporting and filing obligations. Persons that are holding fuel in a proposed listed province at the beginning of an adjustment day should carefully review the information included in this notice and should also familiarize themselves with the Act, its regulations and other related notices. They may also contact the CRA for additional information and clarification.

Charge for fuel held on an adjustment day

Every person that holds fuel (other than in a supply tank of a vehicle) in a listed province at the beginning of an adjustment day and that is, or that can reasonably be expected to be, liable to pay a charge under subsection 38(1) must determine the quantity of fuel of that type held in the listed province by that person at the beginning of the adjustment day. The charge is payable on that day, unless an exception applies.

Exceptions

Subsection 38(2) provides an exception whereby the calculation under subsection 38(1) for the charge for fuel held on an adjustment day does not apply to a quantity of fuel held by a person if the fuel was delivered to the person by a registered distributor in respect of that type of fuel and one of the following applies:

  • the person is a registered emitter and the fuel is held at, or is in transit to, a covered facility of the person;
  • the person is a registered user in respect of that type of fuel and an exemption certificate applies in respect of the delivery in accordance with section 36;
  • the person is a farmer, the fuel is a qualifying farming fuel, and an exemption certificate applies in respect of the delivery in accordance with section 36; or
  • the person is a fisher, the fuel is a qualifying fishing fuel, and an exemption certificate applies in respect of the delivery in accordance with section 36.

Charge not payable

Under subsection 38(4), a charge calculated under subsection 38(1) in respect of a quantity of a type of fuel held at the beginning of an adjustment day by a person in a listed province is not payable if the person is one of the following, in respect of that type of fuel:

Similarly, a charge is not payable on fuel that is, in accordance with the Ships’ Stores Regulations, designated as ships’ stores for use on board a conveyance of a class prescribed under those regulations.

Finally, a charge is not payable in respect of a quantity of a type of fuel held by a person in a listed province at the beginning of an adjustment day if the amount of the charge for that fuel is less than $1,000.

Calculating the charge for fuel held on an adjustment day

In order to determine the amount of the charge for fuel held on an adjustment day, a person must use the formula provided under section 38, which is explained below. The formula under section 38 first involves calculating the charge under section 40.

Determining the amount of the charge under section 38

The amount of the charge is determined by the following formula, which is set out in section 38:

A – B
Where  
A is the amount that would be the amount of a charge in respect of the quantity of the fuel and the listed province determined under section 40 if that charge had become payable on the adjustment day (calculated using the formula provided under “Determining the charge payable under section 40”, below)
B is

(a)

0, if the adjustment day is April 1, 2019, in the listed provinces of Manitoba, New Brunswick, Ontario and Saskatchewan, or July 1, 2019, in the listed provinces of Nunavut and Yukon; and

 

(b)

if the adjustment day is April 1, 2020, April 1, 2021 or April 1, 2022, the amount that would be the amount of a charge in respect of the quantity of the fuel and the listed province determined under section 40 if that charge had become payable on the day before the adjustment day (March 31).

Determining the charge payable under section 40

The amount of a charge payable under section 40 in respect of fuel and a listed province is equal to the amount determined by the formula:

A × B
Where  
A is the quantity of fuel in respect of which the charge becomes payable
B is the rate in respect of fuel of that type for the listed province applicable at the time the charge becomes payable

Examples

The examples below are based on the proposed listed provinces, proposed rates of fuel charge and proposed periods that are set out in the Draft Regulations.

Example 1 

A person in a listed province, other than Nunavut and Yukon, holds the following fuel at 2 locations at the beginning of the adjustment day of April 1, 2019:

Fuel held at the 2 locations
Location Gasoline Light fuel oil
Location 1 10,000 litres 10,000 litres
Location 2 25,000 litres 15,000 litres
Rates of fuel charge at the beginning of the adjustment day for the 2 fuel types
Type Effective April 1, 2019
Gasoline $0.0442 per litre
Light fuel oil $0.0537 per litre
Calculation of the charge for fuel held on the adjustment day at Location 1
Gasoline

To determine the amount of the charge for gasoline held on the adjustment day, the person must first calculate the charge under section 40 using the formula A × B

where

A  is 10,000 litres of gasoline (the quantity of fuel)
B  is $0.0442 per litre (the rate of fuel charge)

The fuel charge for gasoline for location 1 on the adjustment day is $442 (10,000 litres × $0.0442 per litre).

The charge under section 38 must then be determined using the formula A – B

where

A  is $442 (the fuel charge payable on the adjustment day)
B  is $0 (the rate is “0” because adjustment day falls on April 1, 2019)

The charge for gasoline held at the beginning of the adjustment day of April 1, 2019 for location 1 is $442 ($442 – $0).

Light fuel oil

To determine the amount of the charge for light fuel oil held on the adjustment day, the person must first calculate the charge under section 40 using the formula A × B

where

A  is 10,000 litres of light fuel oil (the quantity of fuel)
B  is $0.0537 per litre (the rate of fuel charge)

The fuel charge for light fuel oil for location 1 on the adjustment day is $537 (10,000 litres × $0.0537 per litre). 

The charge under section 38 must then be determined using the formula A – B

where

A  is $537 (the fuel charge on the adjustment day)
B  is $0 (the rate is “0” because adjustment day falls on April 1, 2019)

The charge for light fuel oil held at the beginning of the adjustment day of April 1, 2019 for location 1 is $537 ($537 – $0). 

Calculation of the charge for fuel held on the adjustment day at Location 2
Gasoline

To determine the amount of the charge for gasoline held on the adjustment day, the person must first calculate the charge under section 40 using the formula A × B

where

A  is 25,000 litres of gasoline (the quantity of fuel)
B  is $0.0442 per litre (the rate of fuel charge)

The fuel charge for gasoline for location 2 on the adjustment day is $1,105 (25,000 litres × $0.0442 per litre). 

The charge under section 38 must then be determined by the formula A – B

where

A  is $1,105 (the fuel charge on the adjustment day)
B  is $0 (the rate is “0” because adjustment day falls on April 1, 2019)

The charge for gasoline held at the beginning of the adjustment day of April 1, 2019 for location 2 is $1,105 ($1,105 – $0). 

Light fuel oil

To determine the amount of the charge for light fuel oil held on the adjustment day, the person must first calculate the charge under section 40 using the formula A × B

where

A  is 15,000 litres of light fuel oil (the quantity of fuel)
B  is $0.0537 per litre (the rate of fuel charge)

The fuel charge for light fuel oil for location 2 on the adjustment day is $805.50 (15,000 litres × $0.0537 per litre). 

The charge under section 38 must then be determined using formula A – B

where

A  is $805.50 (the fuel charge on the adjustment day)
B  is $0 (the rate is “0” because adjustment day falls on April 1, 2019)

The charge for light fuel oil held at the beginning of the adjustment day of April 1, 2019 for location 2 is $805.50 ($805.50 – $0). 

Total charge for fuel held on the adjustment day of April 1, 2019
  • To determine the amount of the charge payable under section 38 for gasoline, the person must add the amounts obtained in each location. The sum for the gasoline is $1,547 ($442 + $1,105).
  • To determine the amount of the charge payable under section 38 for light fuel oil, the person must add the amounts obtained in each location. The sum for the light fuel oil is $1,342.50 ($537 + $805.50).

The person is required to report and pay a charge on gasoline in the amount of $1,547 and a charge on light fuel oil in the amount of $1,342.50.


Example 2


A person in a listed province, other than Nunavut and Yukon, holds the following fuel at 2 locations at the beginning of the adjustment day of April 1, 2020:

Fuel held at each location
Location Gasoline Light fuel oil
Location 1 10,000 litres 10,000 litres
Location 2 25,000 litres 15,000 litres
Rates of fuel charge for the 2 fuel types before and at the beginning of the adjustment day
Type Before adjustment day
(April 1, 2019 to March 31, 2020)
Beginning of adjustment day
(April 1, 2020 to March 31, 2021)
Gasoline $0.0442 per litre $0.0663 per litre
Light fuel oil $0.0537 per litre $0.0805 per litre
Calculation of the charge for fuel held on the adjustment day at Location 1
Gasoline

To determine the amount of the charge for the gasoline held on the adjustment day, the person must first calculate the charge under section 40 using the formula A × B

where

A  is 10,000 litres of gasoline (the quantity of fuel)
B  is $0.0442 per litre or $0.0663 per litre, as the case may be (the rate of fuel charge)

Therefore,

  • the fuel charge for gasoline for location 1 on the adjustment day is $663 (10,000 litres × $0.0663 per litre, as per the rate on April 1, 2020);
  • the fuel charge for gasoline for location 1 on the day before the adjustment day of April 1, 2020 is $442 (10,000 litres × $0.0442 per litre, as per the rate on March 31, 2020).

The charge under section 38 must then be determined using the formula A – B

where

A  is $663 (the fuel charge on April 1, 2020)
B  is $442 (the fuel charge on March 31, 2020)

The charge for gasoline held at the beginning of the adjustment day of April 1, 2020 for location 1 is $221 ($663 – $442).

Light fuel oil

To determine the amount of the charge for the light fuel oil held on the adjustment day, the person must first calculate the charge under section 40 using the formula A × B

where

A  is 10,000 litres of light fuel oil (the quantity of fuel)
B  is $0.0537 per litre or $0.0805 per litre, as the case may be (the rate of fuel charge)

Therefore,

  • the fuel charge for light fuel oil for location 1 on the adjustment day is $805 (10,000 litres × $0.0805 per litre, as per the rate on April 1, 2020);
  • the fuel charge for light fuel oil for location 1 on the day before the adjustment day of April 1, 2020 is $537 (10,000 litres × $0.0537 per litre, as per the rate on March 31, 2020).

The charge under section 38 must then be determined using the formula A – B

where

A  is $805 (the fuel charge on April 1, 2020)
B  is $537 (the fuel charge on March 31, 2020)

The charge for light fuel oil held at the beginning of the adjustment day of April 1, 2020 for location 1 is $268 ($805 – $537).

Calculation of the charge for fuel held on the adjustment day at Location 2
Gasoline

To determine the amount of the charge for the gasoline held on the adjustment day, the person must first calculate the charge under section 40 using the formula A × B

where

A  is 25,000 litres of gasoline (the quantity of fuel)
B  is $0.0442 per litre or $0.0663 per litre, as the case may be (the rate of fuel charge)

Therefore,

  • the fuel charge for gasoline for location 2 on the adjustment day is $1,657.50 (25,000 litres × $0.0663, as per the rate on April 1, 2020);
  • the fuel charge for gasoline for location 2 on the day before the adjustment day of April 1, 2020 is $1,105 (25,000 litres × $0.0442, as per the rate on March 31, 2020).

The charge under section 38 must then be determined using the formula A – B

where

A  is $1,657.50 (the fuel charge on April 1, 2020)
B  is $1,105 (the fuel charge on March 31, 2020)

The charge for gasoline held at the beginning of the adjustment day of April 1, 2020 for location 2 is $552.50 ($1,657.50 – $1,105).

Light fuel oil

To determine the amount of the charge for the gasoline held on the adjustment day, the person must first calculate the charge under section 40 using the formula A × B

where

A  is 15,000 litres of light fuel oil (the quantity of fuel)
B  is $0.0537 per litre or $0.0805 per litre, as the case may be (the rate of fuel charge)

Therefore,

  • the fuel charge for light fuel oil for location 2 on the adjustment day is $1,207.50 (15,000 litres × $0.0805, as per the rate on April 1, 2020);
  • the fuel charge for light fuel oil for location 2 before the adjustment day of April 1, 2020 is $805.50 (15,000 litres × $0.0537, as per the rate on March 31, 2020).

The charge under section 38 must then be determined using the formula A – B

where

A  is $1,207.50 (the fuel charge on April 1, 2020)
B  is $805.50 (the fuel charge on March 31, 2020)

The charge for light fuel oil held at the beginning of the adjustment day of April 1, 2020 for location 2 is $402 ($1,207.50 – $805.50).

Total charge for fuel held on the adjustment day of April 1, 2020
  • To determine the amount of charge payable under section 38 for gasoline, the person must add the amounts obtained in each location. The sum for gasoline is $773.50 ($221 + $552.50).
  • To determine the amount of charge payable under section 38 for light fuel oil, the person must add the amounts obtained in each location. The sum for light fuel oil is $670 ($268 + $402).

The person is NOT required to report or pay either amount ($773.50 or $670) because the charge payable for each type of fuel is less than $1,000.

Reporting and paying the charge

Every person that is liable to pay a charge on fuel held at the beginning of an adjustment day must file Form B402, Fuel Charge Return for Fuel Held on Adjustment Day, and pay that charge by the end of the following month. For example, the charge on fuel held, as proposed, in the listed provinces of Manitoba, New Brunswick, Ontario and Saskatchewan at the beginning of April 1, 2019 must be paid by the end of May 2019, and the charge on fuel held, as proposed, in the listed provinces of Nunavut and Yukon at the beginning of July 1, 2019 must be paid by the end of August 2019.

Form B402 must be sent to:

Sudbury Tax Centre
Fuel Charge Program
Post Office Box 20000, Station A
Sudbury ON  P3A 5C1

Interest and/or penalties may apply to late payments. For information on payment methods, go to Payments to the Canada Revenue Agency.

Further information

For all technical publications related to the Greenhouse Gas Pollution Pricing Act and its regulations, go to Fuel charge technical information.

To make a technical enquiry on the fuel charge or for additional information on the application of the fuel charge for each type of registrant, go to Contact Information – Excise Duties, Excise Taxes, Fuel Charge and Air Travellers Security Charge.

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