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, Tower A, Place de Ville
320 Queen Street
Ottawa ON K1A 0L5
[Addressee]
Case Number: 9000277
Attention: [Client]
February 13, 2025
Dear [Client]:
Subject: FUEL CHARGE INTERPRETATION
Non-Registered Road Carriers
Thank you for your letter dated [mm/dd/yyyy] with various questions concerning non-registered road carriers under the Greenhouse Gas Pollution Pricing Act (GGPPA).
Background:
From the information in your letter and our subsequent phone calls with your associate [individual A], we understand that you wish to seek clarification with respect to the reporting requirements of road carriers who do not register within the timeline established by the GGPPA.
INTERPRETATION REQUESTED
1. Registration:
i) Canada Revenue Agency (CRA) administratively allows up to 30 days of backdating under the Excise Tax Act (ETA). Is there a similar registration backdating tolerance administered by the CRA under the GGPPA as well?
ii) If a person ceases to meet the registration criteria after a specified amount of time, is there a timeframe for which a person is expected to remain a registrant before requesting cancellation of their fuel charge account? Does the Minister have any existing administrative policies which may provide further clarity on who is required to register?
iii) Would registration apply to a lessee who has used qualifying motive fuel within a leased specified commercial vehicle, even where the person has not driven the vehicle outside of the originating listed province? Would a lessee who operates a leased specified commercial vehicle exclusively within a listed province, using a type of fuel that is qualifying motive fuel, be required to register under the GGPPA?
2. Filing frequency:
Is a non-registered road carrier required to file on a monthly or quarterly basis?
3. Charges:
i) Is the charge payable by non-registered road carriers determined under section 20 or under section 32 of the GGPPA?
ii) Is a non-registered road carrier required to perform adjustment day calculations, and if so, under what circumstances?
iii) Is it the intention of the Minister that there be no limitation on how many times a non-registered road carrier might be required to pay the federal fuel charge on the same quantity of fuel?
iv) Does the Minister have a policy on which methodologies would be considered a reasonable estimate of volume within a supply tank where a non-registered road carrier has not taken efforts to measure these volumes in earlier periods?
4. Voluntary Disclosure:
Does the Minister allow for persons to apply for voluntary disclosure relief under the GGPPA? If so, what is the appropriate application method?
INTERPRETATION GIVEN
1. Road carrier registration requirements
The required dates for registration under Part IX – Goods and Services Tax are covered in section 240 of the ETA. We cannot comment on that section as interpretation of the ETA and any related administrative provisions are outside the area of responsibility of the Excise and Speciality Tax Directorate. Although there may be similarities between the wording of the ETA and the GGPPA, each act must be interpreted independently except where a specific reference to another piece of legislation is contained.
In accordance with subsection 63(1) of the GGPPA, a person is required to be registered as a road carrier if the person uses qualifying motive fuel in a specified commercial vehicle in a listed province. The definition of a specified commercial vehicle can be found in section 3:
specified commercial vehicle means a vehicle
(a) that is used to provide commercial transportation of individuals or goods by road
(i) from one province to another province, or
(ii) from a particular location to another location if one location is in Canada and one location is outside Canada;
(b) that
(i) has two axles and a gross vehicle weight exceeding 11,797 kg,
(ii) has three or more axles regardless of weight, or
(iii) when combined with the trailer with which it is used, has a gross vehicle weight exceeding 11,797 kg; and
(c) that is not a recreational vehicle, including a motor home, bus or pickup truck with attached camper, if used solely for a particular individual's personal use or enjoyment or the personal use or enjoyment of any other individual at the particular individual's expense.
If a person is using a qualifying motive fuel in a vehicle that meets the three conditions specified above, they are required to be registered as a road carrier for the purposes of Part 1 of the GGPPA.
Section 3 of the GGPPA states:
registered road carrier in respect of a type of fuel means a person that is registered under Division 4 of this Part as a road carrier in respect of that type of fuel.
Subsection 63(4) states that a person must apply to the Minister for registration before the later of commencement day and the day on which the person first uses fuel of that type in a specified commercial vehicle in a listed province.
In order for the Minister to register a person under the GGPPA, the person must file an application for registration in accordance with subsection 64(1) which states that it must be made in prescribed form containing prescribed information in a prescribed manner. For road carriers, the prescribed forms are L400 Fuel Charge Registration and L400-2, Fuel Charge Registration Schedule – Road Carrier.
The effective date of registration is the date the completed forms are received by CRA. In accordance with subsection 64(2), the Minister will notify the person of the registration number and the effective date of the registration for the purposes of Part 1 of the GGPPA. Prior to this date, a person is not a registered road carrier as defined in section 3, noted above.
The phrase “the Minister may register any person that applies for registration …” in subsection 64(2) establishes the fact that the Minister cannot register a person if they do not apply for registration, which is the prescribed form and manner as required under subsection 64(1) as previously stated.
The Minister does not have an administrative backdate tolerance as the GGPPA does not contain any provisions that permit it. The required date of registration is clearly outlined in subsection 63(4), and section 126 contains a penalty for failure to register that applies to any person that is required to be registered under Division 4 but does not apply for registration as and when required by the Act. In addition, a negative net fuel quantity rebate is only available to registered road carriers in accordance with sections 46 and 32.
The GGPPA does not contain minimum periods of registration. If a person meets the definition of a required registration, they must remain registered for the duration of time that they meet that definition. In the case of road carriers, once a person meets the requirements to register under subsection 63(1), they must remain registered as a road carrier until such time as they no longer meet that definition.
The administration of the GGPPA as it relates to road carriers is similar to the administration of the International Fuel Tax Agreement (IFTA), although not identical. Where the GGPPA does not directly address a situation, the CRA will generally allow road carriers to follow the rules for IFTA. In the case of a leased vehicle, the contract between the lessor and lessee may stipulate who is responsible for the purchase of fuel that is put into a supply tank and used, therefore meeting the conditions regarding the requirement to register for the fuel charge. Where a contract does not exist, or one exists but does not address this issue, the CRA follows the general IFTA rule in regards to short term and long term leases. In the case of a short term lease, which is 29 days or less, the lessor will report the fuel usage. For long term leases, which are 30 days or longer, the lessee is responsible for reporting the fuel usage.
2. Filing Frequencies:
Paragraph 68(2)(b) states that a reporting period of a registered road carrier is a calendar quarter. All other persons file based on a calendar month in accordance with paragraph 68(2)(a). A non-registered road carrier is required to file monthly returns.
Reporting periods for new or cancelled registrations are covered under subsection 68(3) and a new reporting period starts on the day following the registration date. If the effective date of registration creates a stub period, the person is required to file non-registrant returns for all periods prior to registration, including any partial monthly periods.
3. Charges:
Charges are payable by non-registered road carriers under subsection 20(2)1 of the GGPPA. Subsection 20(2) states that when any person, other than the persons identified in subsection 20(1), brings a quantity of fuel into a listed province from a place in Canada, they have an obligation to pay a charge in respect of the type of fuel and the listed province based on the amount determined under section 40. A charge is not payable for fuel brought into a listed province in the supply tank of a vehicle under subsection 20(6), however paragraph 20(7)(d) establishes an exception from that rule if the person is required to be registered under Division 4 as a road carrier and is not so registered.
The quantity of fuel subject to a charge under subsection 20(2) may be determined in a manner satisfactory to the Minister as outlined in section 9. Generally, this will be the positive fuel quantity as determined for the person’s IFTA returns.
Registered road carriers are included under paragraph 40(1)(a) and subject to the net fuel quantity calculation in section 32. Non-registered road carriers are covered under paragraph 40(1)(c) and subject to a charge based on the quantity of fuel in respect of which the charge becomes payable under subsection 20(2).
The calculation outlined in section 32 is only applicable to registered road carriers.
As previously stated, a charge applies under subsection 20(2), in accordance with subsection 20(7), when a non-registered road carrier brings fuel into a listed province in the supply tank of a specified commercial vehicle. The GGPPA does not provide exceptions or adjustments for fuel that has the federal fuel charge embedded at the time of purchase, or for fuel that was already subject to a charge under subsection 20(2) when it was brought into a listed province. However, by accepting the positive fuel quantity as determined for IFTA purposes for non-registered road carriers, the exposure to a double application of the fuel charge is diminished.
The liability for charges payable for fuel held on adjustment day is covered under subsection 38(1). Subsection 38(5) states that the quantity of fuel must be determined by every person that holds fuel in a listed province on adjustment day other than in the supply tank of a vehicle. Therefore, neither registered nor non-registered road carriers who only hold fuel in a supply tank of a specified commercial vehicle are liable for charges related to adjustment day. However, both registered road carriers and non-registered road carriers are subject to charges for any bulk or yard fuel held on adjustment day.
4. Voluntary disclosures under the GGPPA
The Minister may waive, cancel, or reduce any interest or penalties payable by a person within 10 calendar years after the end of a reporting period of a person in accordance with subsections 100(1) and 125(1).
The GGPPA is included under the Voluntary Disclosures Program despite the fact that GST/HST Memorandum 16-5 has not been updated. A Privacy Impact Assessment from the Voluntary Disclosures Program, last updated 2024-03-08, can be found online which states:
“The purpose of the Voluntary Disclosures Program is to promote voluntary compliance towards tax obligations such as the accounting and payment of duty and tax provisions under the Income Tax Act, Excise Tax Act, Excise Act, 2001, Air Travellers Security Charge Act, the Softwood Lumber Products Export Charge Act, 2006, the Select Luxury Items Tax Act, the Greenhouse Gas Pollution Pricing Act, the Underused Housing Tax Act and section 94.1 of the Tax Administration Act.”
The application process would be the same as other Acts and further information can be found online from the Voluntary Disclosures Program.
The interpretations given in this letter, including any additional information, is not a ruling and does not bind the Canada Revenue Agency (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 647-355-9305.
Sincerely,
Janet Pelletier
Janet Pelletier, CPA, CGA
Senior Rulings Officer
Fuel Charge Unit
Excise Tax and Fuel Charge Division
Excise and Specialty Tax Directorate
1 Charges payable upon importing fuel from outside of Canada under subsection 20(3) are to be paid and collected by Canada Border Services Agency (CBSA) under the Customs Act in accordance with subsection 20(4), therefore they will not be addressed in this letter.
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