Motor Fuel Tax & Carbon Tax Exemptions

Certain individuals and businesses may be eligible to purchase fuel without paying tax. Some exemptions apply to both taxes, while others apply only to motor fuel tax or to carbon tax.

If you’re claiming an exemption, you may have to provide information proving you qualify for the exemption, such as an exemption certificate or identify card.

There are many exemptions from motor fuel tax and carbon tax. The following are some of the most common ones.

Exemptions from Motor Fuel & Carbon Taxes

The following fuel is exempt from both motor fuel tax and carbon tax:

Exemptions from Motor Fuel Tax Only

The following fuel is exempt from motor fuel tax:

  • Jet fuel purchased by an airline that is a registered consumer
  • Marine bunker fuel
  • Marine gas oil purchased for and used in a marine gas turbine engine that propels a commercial passenger or cargo ship
  • Fuel that will not be used in an internal combustion engine (e.g. coloured heating oil or fuel used for an exempt purpose such as a lubricant or to manufacture explosives)
  • Propane (including Liquified Petroleum Gas):
    • Purchased in pre-filled or refilled cylinders (28 litres)
    • Used in a residential dwelling where certain conditions are met
    • Used by a qualifying farmer for a farm purpose
    • Learn about claiming exemptions for propane in the bulletin Propane Exemptions (MFT 014) (PDF)

Exemptions from Carbon Tax Only

The following fuel is exempt from carbon tax:

  • Fuel purchased by an end purchaser, who at the time of sale has entered into a contract with a common carrier to export the fuel from B.C. for their own use outside B.C.
  • Fuel used in an interjurisdictional cruise ship
  • Fuel used in a ship prohibited from coasting trade under the Coasting Trade Act (Canada)
  • Fuel purchased in sealed, pre-packaged containers of four litres or less
  • Fuel purchased by a registered consumer, registered air service or registered marine service (i.e. certain persons that purchase fuel for exempt purposes)

There are a limited number of exemptions from carbon tax for fuel that isn't combusted and is used in the following circumstances:

  • As a raw material to manufacture anodes for use in an electrolytic process for smelting aluminum
  • As a raw material in an industrial process to:
    • Produce or upgrade another fuel
    • Manufacture another substance
  • As a reagent to separate out coal or ores of metal in an industrial floatation process
  • In pipeline pigging
  • As antifreeze in a natural gas pipeline
  • In down-hole operations at a well site
  • To remove natural gas liquids or impurities in the processing of natural gas
  • As a refrigerant in a closed system in the processing of natural gas

If you're not a registered consumer, you must pay tax when you purchase the fuel for use in these circumstances but you may apply for a refund.