New Canadian Fuel Charge Take Effect April 1, 2019

Canada has passed a new Fuel Charge that is expected to be implemented April 1, 2019 for users of fossil fuels in New Brunswick, Ontario, Manitoba, and Saskatchewan.  Motor Carriers that operate in those territories are required to register by April 1, 2019 with the Canadian Revenue Agency (CRA) or face a fine of $2000.  The Act responsible for this tax is the Greenhouse Gas Pollution Pricing Act.

The new tax is, to say the least, controversial.  The information released by the Canada Revenue Agency leaves questions that are unanswered or not well explained and motor carriers in the US and Canada are scrambling to understand the requirements and comply.  MMTA has spoken to the CRA and we now have a CRA contact to clarify the new tax as it is unfolding. The intent of this article is to pass along information to MMTA members and to explain our understanding of the issue and the impact on our members.

The fuel charge, also known as a “carbon tax” is intended to tax those who use fossil fuels in order to reward Canadian citizens that do not.  The idea is to tax those who pollute in order to change society’s behavior, eventually reducing the reliance on fossil fuels and the pollution to the environment.  The tax begins at a rate of $20 per ton of carbon in 2019 and increases to $50 per ton in 2022.  The per ton rate on light fuel oil (diesel fuel) equates to a per liter tax of $0.0537 in 2019 and rises each year until 2022 at which time the tax will be $0.1341 per liter.

This fuel charge is designed to work in the same manner as IFTA does now.  To be clear, however, the fuel charge is in addition to the IFTA tax and reporting requirements.  After registration, road users will file quarterly reports and pay tax on the number of gallons used in the applicable territories.  For fuel purchased in Canada, but burned in the US or in a territory that is not subject to the carbon tax, the purchaser may be eligible for a rebate.  All fees are due at the end of the month following the end of each quarter.  If at all possible, motor carriers are better off not to purchase fuel in Canada as the carbon tax will be imposed at the pump necessitating the need to apply for a rebate.

In order to register as required with the CRA, you must first have a Canadian business number (BN9).  There is no fee for the BN9.  CRA recommends following these instructions for Non-Residents to obtain the BN9 by phone:

    • This information will be required when calling the BN registration telephone number:
        • Owner(s) name and contact number(s)
        • Physical and mailing addresses
        • Incorporating jurisdiction
    • Please identify that you are requesting a BN9 for the purpose of registering for the fuel charge program
    • Toll Free: (Canada/United States) 1-866-453-0452
    • Local: 519-252-4705
    • We accept collect calls by automated response: 613-221-3039

Please note that you may hear a beep and experience a normal connection delay.

    • Hours of operation: 8:30 a.m. – 4:30 p.m. (ET) Monday to Friday

Once you obtain the BN9 and register with CRA you will be issued an account for reporting of the fuel charge.  Forms for quarterly reporting have not yet been developed, but will be added to our information as soon as available.  Motor Carriers that operate commercial motor vehicles meeting the definition in the act (same as IFTA qualifying vehicle) are required to register as a road carrier and fill out a schedule of the fuel used on the roads.  If you also haul fuel, in addition to filing as a road carrier you must file as a registered importer.  Those who are required to file IFTA will be required to file Fuel Charge reporting.  For owner operators leased to a motor carrier, the carrier responsible for IFTA will be responsible for fuel charge.

The following is a summary of the Fuel Charge and links to the information that we have available:

As always, feel free to contact MMTA staff with any questions that you may have.