Motor Fuel Tax & Carbon Tax Frequently Asked Questions

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Individuals

Businesses

Questions Related to Carbon Tax Only

Questions Related to Motor Fuel Tax Only

Overdue Tax Return Payment Questions

Common errors taxpayers make when submitting tax returns and payments

General

 Where can I find the motor fuel tax and carbon tax rates?

Current motor fuel tax and carbon tax rates are set out in Tax Rates on Fuels (Bulletin MFT-CT 005) (PDF). The carbon tax rates are also set out in the schedules Carbon Tax Rates by Fuel Type - to December 31, 2009 (PDF) and Carbon Tax Rates by Fuel Type - From January 1, 2010 (PDF).

 How are the motor fuel tax, carbon tax, provincial sales tax (PST) and ICE Fund tax calculated?

Fuel Sold for Use in Internal Combustion Engines (e.g. cars, trucks, boats, airplanes and other equipment, etc.) and Propane (sold for any use):

Motor fuel tax - not PST - applies to propane in all cases unless a specific exemption applies. For more information, please refer to Propane Exemptions (Bulletin MFT 014) (PDF).

Motor fuel tax and carbon tax are calculated on the volume of fuel.

Example - Tax Calculated on Gasoline

 

Gasoline purchase price per litre (excluding tax) $1.0000
Motor fuel tax (cents per litre without transit tax) .1450
Carbon Tax (cents per litre rate at July 1, 2012) .0667
Total purchase price per litre $1.2117

Substances (Fuel) Sold for Use Other Than in Internal Combustion Engines:

Carbon tax, provincial sales tax (PST) and, in some cases, the ICE Fund tax apply to the fuel, unless there is a specific exemption. The carbon tax is calculated on the volume of the fuel. The PST and the ICE fund tax (where applicable) are calculated as a percentage of the purchase price. For more information on how the PST and ICE Fund tax apply to energy products, please see Energy, Energy Conservation and the ICE Fund Tax (Bulletin PST 203) (PDF).

Note: As mentioned above, motor fuel tax - not PST - applies to propane in all cases. This includes propane purchased for use other than in internal combustion engines.

Example - Tax Calculated on Heating Oil for Commercial Purposes

 

Heating oil (fuel oil) purchase price per litre (excluding tax) $1.0000
Carbon Tax (cents per litre rate at July 1, 2012) .0767
PST (7% of the purchase price) .0700
ICE Fund Tax (0.4% of the purchase price) .0040
Total purchase price per litre $1.1507

Note: Goods and Services Tax (GST)

The federal GST is calculated as a percentage of the purchase price of the fuel. Any applicable carbon tax and/or motor fuel tax is included in the purchase price for the purposes of calculating GST. PST is not included in the purchase price for the purposes of calculating GST.

For a complete list of the fuels and combustibles subject to motor fuel tax and carbon tax, and their tax rates, please see Tax Rates on Fuels (Bulletin MFT-CT 005) (PDF).

 Do motor fuel tax and carbon tax apply to ethanol and biodiesel?

Yes. Effective January 1, 2010, motor fuel tax and carbon tax apply to ethanol at the same rate as gasoline, and to biodiesel and renewable diesel at the same rate as diesel or light fuel oil. However, other non petroleum based fuels, such as pulping liquor and wood, are not subject to carbon tax.

 Who do I contact for more information?

If you have any questions about motor fuel tax and/or carbon tax, or your potential obligations under the legislation, please call us toll-free at 1-877-388-4440, email your questions to CTBTaxQuestions@gov.bc.ca.

Individuals

 Are persons visiting B.C. required to pay motor fuel tax and carbon tax?

Yes. If you are visiting British Columbia, you are required to pay motor fuel tax and carbon tax on any taxable purchases of fuel in the province.

 I am registered for the Fuel Tax Refund Program for Persons with Disabilities under the Motor Fuel Tax Act. Am I eligible for a refund of carbon tax?

No. There is no carbon tax refund program for persons with disabilities.

 If I bring fuel into B.C. in a tidy tank or similar container, do I have to pay motor fuel tax and carbon tax on the fuel?

Yes. You must pay motor fuel tax and carbon tax on fuel that you bring into B.C. for your own use in a tidy tank or similar container, whether you are a commercial or non-commercial user. To pay motor fuel tax, use the Self Assessors Motor Fuel Tax Return (FIN 135) (PDF). To pay carbon tax, use the Carbon Tax Return - Self-Assessors form (FIN 112) (PDF).

 Are farmers exempt from motor fuel tax and carbon tax on coloured fuel purchased or used for farming operations?

Qualifying farmers may purchase coloured gasoline and coloured diesel exempt from motor fuel tax and carbon tax  
in certain situations. For more information on the coloured fuel and propane exemptions for farmers,  please see Coloured Fuels (Bulletin MFT-CT 003) (PDF) and Propane Exemptions (Bulletin MFT 014) (PDF).

To provide an exemption for these sales, you must obtain from the farmer either the Certificate of Exemption - Farmer (FIN 458) (PDF) or a copy of a valid BC Farmer Identity Card.

 I am a farmer. Can I purchase coloured fuel for my on-highway farm truck?

You may purchase coloured fuel for your on-highway farm truck if it is licensed as a farm vehicle under the Commercial Transport Act (e.g. it is a vehicle with a farm licence plate, also known as an A or G plate), and it is being used by yourself or another person in the operation of your farm.

Businesses

 Can the old certificate of exemption be used to make exempt sales of coloured fuel to farmers?

Yes. Although the old Certificate of Exemption as a Farmer (FIN 465) has been replaced by a new certificate, you may continue to accept the old certificate for exempt sales of coloured fuel to farmers until October 1, 2013. Alternatively, you may obtain a copy of the farmer's valid BC Farmer Identify Card to support the exempt sale.

Effective April 1, 2013, the old certificate can't be used for exempt sales of propane, or for farming equipment or other goods exempt of provincial sales tax (PST). To provide an exemption for these sales, you must obtain from the farmer either the new Certificate of Exemption - Farmer (FIN 458) (PDF) or a copy of a valid BC Farmer Identity Card.

 I am a fuel retailer and I paid security to my supplier. If I sell the fuel exempt of tax to an eligible end purchaser, how do I get reimbursed for the security I paid?

You may apply for a refund of the security you paid if you sell the fuel to someone who is exempt from motor fuel tax and/or carbon tax at the time of purchase, such as a registered consumer or a status Indian.

For more information, please see Refunds for Deputy Collectors and Retail Dealers (Bulletin MFT-CT 007) (PDF), and Sales to First Nations, and the Exempt Fuel Retailer Program (Bulletin MFT-CT 002) (PDF).

 What happens if I accidentally charge motor fuel tax, carbon tax or security at the wrong rate?

If you sell fuel to an end purchaser and you:

  • overcharge the motor fuel tax and/or carbon tax, you may reverse the sale and re-bill your customer if you have not yet remitted the additional tax collected to the ministry. If you have already remitted the additional tax collected to the ministry, your customer may apply to the ministry for a refund.
  • undercharge the motor fuel tax and/or carbon tax, you are still required to pay:
    • if you are a collector for that fuel, the correct amount of security or tax to the ministry, or
    • if you are a deputy collector or retail dealer for that fuel, other than natural gas, the correct amount of security to your fuel supplier, or
    • if you are a retail dealer for natural gas, the correct amount of tax to the ministry.

If you sell fuel to a deputy collector or retail dealer and you:

  • overcharge the motor fuel tax and/or carbon tax, you should reverse the sale and re-bill the deputy collector or retail dealer. If you do not reverse the sale and re-bill the deputy collector or retail dealer, you are required to pay the additional tax collected to the ministry.
  • undercharge the motor fuel tax and/or carbon tax, you are still required to pay:
    • if you are a collector for that fuel, the correct amount of security to the ministry, or
    • the correct amount of security to your fuel supplier.

    In these cases, you may re-bill the deputy collector or retail dealer to collect the correct amount of tax.

 If my business rents tools and equipment that may include fuel, do I need to collect motor fuel tax and carbon tax from my customers for the fuel?

It depends. If you rent or lease equipment with fuel to your customer for a single price (e.g. a fixed daily rate), you are considered to be the end purchaser (consumer) of the fuel. This means that you are required to pay motor fuel tax and carbon tax to your supplier, and you do not collect motor fuel tax and/or carbon tax from your customer.

If your customer returns the equipment with less fuel than you originally provided, and you charge your customer a fee for that fuel, motor fuel tax and carbon tax apply in the same way as described above. You pay motor fuel tax and carbon tax to your supplier. You do not collect motor fuel tax and/or carbon tax from your customer because the fee you charge is considered to be a penalty for returning the equipment with less fuel, rather than a sale of fuel.

If you rent or lease equipment with fuel to your customer and you separately itemize the fuel, other than natural gas, on your customer's invoice, your customer is considered to be the end purchaser (consumer) of the fuel and you are the retail dealer. You are required to collect motor fuel tax and carbon tax from your customer to reimburse yourself for the security you paid when you purchased the fuel from your supplier.

For more information, please see Fuel Sellers (Bulletin MFT-CT 001) (PDF).

If you separately itemize natural gas when you rent or lease equipment, you are required to apply to the ministry to be appointed as a natural gas retail dealer. You collect carbon tax from your customers and remit the carbon tax to the ministry.

For more information, please see Natural Gas and Biomethane Sellers (Bulletin CT 001) (PDF).

 What is taxable for manufacturers or importers of fuel and combustibles?

If you use the fuel or combustibles that you manufactured in, or imported into, B.C. for your own business operations, you are required to self-assess and pay motor fuel tax and/or carbon tax on that fuel or combustible.

The self-assessed motor fuel tax is payable on the 15th day, and the self-assessed carbon tax is payable on the 28th day, of the month following the reporting period in which you use the fuel in the province. Reporting periods are monthly, quarterly or annually, and are established by the ministry after you have filed your first tax return.

For more information, please see Self-Assessing Motor Fuel and Carbon Tax (Bulletin MFT-CT 006) (PDF).

 I am registered under the Motor Fuel Tax Act and/or the Carbon Tax Act to sell or purchase certain types of fuel. Who do I contact regarding changes to my business, such as my mailing address or the types of fuel I am authorized to import and sell?

Please contact us by mail or email at:

Motor Fuel and Carbon Tax Section
Consumer Taxation Programs Branch
Ministry of Finance
PO Box 9447 Stn Prov Govt
Victoria, BC V8W 9V7
CarbonTax@gov.bc.ca or FuelTax@gov.bc.ca

 What is the penalty for vendors selling fuel without being appointed collectors?

A vendor is a person who sells fuel for the first time after its manufacture in, or import into, B.C. If you are a vendor and you are not appointed as a collector, you must not sell fuel within B.C. for the first time after it is manufactured in, or imported into, B.C. If you do so, you will be charged a penalty equal to the amount of security that you should have paid if you had been a collector. If you continue to wilfully sell fuel without an appointment, the ministry may charge you an additional penalty equal to the amount of security that you should have paid as if none of your sales were made exempt of tax or security under the Motor Fuel Tax Act and/or Carbon Tax Act. Also, you may be liable to a fine of up to $10,000 and/or imprisonment for up to two years.

Questions Related to Carbon Tax Only

 What is taxable under the Carbon Tax Act?

Fuels listed in the carbon tax rate schedules are generally subject to carbon tax if the fuel is:

  • purchased in B.C.,
  • transferred in B.C., into the supply tank of an aircraft or ship, or a vehicle run on rails,
  • brought into B.C. in the supply tank, or supplemental supply tank, of an aircraft or ship,
  • brought into B.C. for own use in a tidy tank or similar container (whether for commercial or non-commercial use),
  • in excess of 182 litres and brought into B.C. in the supply tank, or supplemental supply tank, of a motor vehicle other than an IFTA commercial vehicle, or
  • used in B.C..

In addition, combustibles listed in the schedules are taxable if used to produce energy or heat.

Examples of taxable uses of fuels and combustibles include:

  • heating businesses or residences,
  • running motor vehicles or other engines,
  • operating machinery or equipment,
  • flaring, and
  • burning tires to produce energy or heat.

 What is not subject to tax, what is exempt from tax and what qualifies for a refund of tax under the Carbon Tax Act?

Some non-petroleum based fuels, such as pulping liquor, wood, methanol produced from biomass and, in most circumstances, methane produced from biomass (biomethane) are not subject to carbon tax. However, when biomethane is blended with fuel and the proportion of biomethane and fuel cannot be determined, the blend is subject to carbon tax.

In certain circumstances, fuels are exempt from carbon tax depending on how they are sold or used. In these cases, either carbon tax will not be charged at the time of purchase, or, if charged, you may apply for a refund of the carbon tax paid. Examples include:

  • fuel that is sold in B.C. and exported by the seller from B.C. for an end purchaser's (consumer's) own use outside the province,
  • fuel that is sold to an end purchaser for their own use outside B.C., if the end purchaser, at the time of sale, has entered into a contract with a common carrier to export the fuel from the province,
  • fuel sales, including exchanges and barters, by one refiner collector to another refiner collector, if both are appointed refiner collectors for the same type or subcategory of fuel,
  • fuel used in interjurisdictional cruise ships,
  • fuel used in ships prohibited from, and not engaged in, the coasting trade,
  • fuel sold in sealed, pre-packaged containers of four litres or less,
  • fuel purchased on reserve by status Indian end purchasers (consumers) who qualify as Indians or bands under section 87 of the Indian Act (Canada) (for more information, please see Sales to First Nations, and the Exempt Fuel Retailer Program (Bulletin MFT-CT 002) (PDF),
  • fuel purchased by visiting forces and members of the diplomatic and consular corps,
  • fuel brought into B.C. in the supply tank, or supplemental supply tank, of a non-commercial aircraft or ship and used in the operation of the aircraft or ship, and
  • fuel up to, and including, 182 litres brought into B.C. in the supply tank, or supplemental supply tank, of a motor vehicle other than an IFTA commercial vehicle or a locomotive, and used in the operation of that vehicle.

In certain circumstances, fuels are exempt from carbon tax if they are not combusted. If you are registered as a registered consumer, you are not required to pay carbon tax when you purchase the types of fuel specified on your registered consumer certificate. If you are not registered as a registered consumer, you are required to pay carbon tax when you purchase the fuel and subsequently you may apply for a refund of the carbon tax paid on fuel used for the following purposes:

  • as a raw material (feedstock) in an industrial process to produce or upgrade another fuel or to manufactor another substance,
  • as a raw material to manufacture anodes that are to be used in an electrolytic process for smelting aluminum,
  • as a reagent to separate out coal or ores of metal in an industrial floatation process,
  • in pipeline pigging,
  • 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,
  • as an anti-freeze in a natural gas pipeline (effective September 2, 2009), and
  • as a reductant in the production of lead or zinc (for more information, please see Carbon Tax Refunds for Purchasers (Bulletin CT 002) (PDF).

In certain circumstances, fuels are either exempt from carbon tax or qualify for a refund of carbon tax, if they are used for interjurisdictional flights or interjurisdictional marine transportation. If you are registered as a registered consumer, a registered air service or a registered marine service, you are not required to pay carbon tax when you purchase the types of fuel specified on your registered consumer, registered air service or registered marine service certificate. If you are not registered as a registered consumer, a registered air service or a registered marine service, you are required to pay carbon tax when you purchase the fuel and subsequently you may apply for a refund of the carbon tax paid on fuel used for interjurisdictional flights or interjurisdictional marine transportation.

Note: In all cases, the seller is required to have documentation to show why carbon tax was not collected. Documentation may include copies of certificates of exemption, registered consumer certificates, and registered air or marine service certificates.

 Are businesses that purchase carbon offsets or credits exempt from paying carbon tax? 

No. If you purchase carbon offsets or credits, you are still required to pay carbon tax.

For information on carbon credits, please see the Pacific Carbon Trust website

 When do fuel sellers need to remit carbon tax to the ministry?

The only fuel sellers required to regularly remit carbon tax to the ministry are natural gas retail dealers and collectors.

If you are a natural gas retail dealer, you are required to remit carbon tax to the ministry on the 15th day of the month following the reporting period in which you sell the natural gas to an end purchaser (consumer).

If you are a collector, you are required to remit security equal to the carbon tax to the ministry on the 15th day of the month following the reporting period in which you sell the fuel to your customers.

Reporting periods are monthly, quarterly or annually, and are established by the ministry when you are registered as a natural gas retail dealer or appointed as a collector. Your reporting period will be based on the annual amount of tax or security you are required to remit.

 What are the different conversion factors for propane?

  • 1 liquid litre = 0.02559 gigajoules (GJ)
  • 1 liquid litre = 1.12 liquid pounds
  • 1 pound = 0.8929 litres
  • 1 cubic metre (m3) liquid propane = 1,000 litres
  • 1 gigajoule (GJ) = 39.071657 litres of liquid propane

 My business meets the qualifications to be a collector and a registered consumer under the Carbon Tax Act. Can I use my collector appointment number to purchase fuel exempt of tax for my own use as a registered consumer or do I need to apply for a registered consumer certificate?

No. You cannot use your collector appointment number to purchase fuel exempt for your own use as a registered consumer. You need to apply for a registered consumer certificate using the Registered Consumer Application for Carbon Tax (FIN 164) form (PDF).

 What is industrial oil?

Industrial oil is a subcategory of light fuel oil that is used as feedstock or for other non-energy purposes. A fuel is considered a feedstock when it is used as a raw material in an industrial process, is used to produce or upgrade another fuel, or is used to manufacture another substance without the feedstock being combusted. Industrial oil is subject to carbon tax.

 If I sell heavy fuel oil as an industrial lubricant, am I considered to be selling industrial oil?

No. You are considered to be selling heavy fuel oil and must charge carbon tax at the rate applicable for heavy fuel oil. Only light fuel oil can be sold as industrial oil.

 What are gas liquids?

Effective January 1, 2010, gas liquids were added as a new fuel type under the Carbon Tax Act. Gas liquids can be processed from natural gas or crude oil. Gas liquids are a mixture of two or more of the following components or substances: ethane, butane, propane and pentanes plus. To be considered gas liquids, the fuel must not have been processed or separated into ethane, butane, propane or pentanes plus, and must not be re-mixed. For example, butane and propane re-mixed together is not considered gas liquids, but rather a blend of butane and propane.

 How does carbon tax apply to gas liquids? 

Effective January 1, 2010, gas liquids became subject to the payment of tax or security under the Carbon Tax Act, when purchased for use or resale.

 What is pentanes plus?

Pentanes plus is a component, like ethane, butane or propane, that can be processed from both natural gas and crude oil. Pentanes plus can be pentane alone, heavier hydrocarbons, or pentane in combination with one or more heavier hydrocarbons.

Pentanes plus is subject to the payment of tax or security under the Carbon Tax Act, when purchased for use or resale.

Questions Related to Motor Fuel Tax Only

 I operate an aircraft as part of my business. Can I use coloured fuel in my plane?

No. Coloured Fuel is not authorized for use in any aircraft. For information on authorized uses of coloured fuel, please see Coloured Fuels (Bulletin MFT-CT 003) (PDF).

 I am a logger. Can I use coloured fuel in my chainsaw?

Yes. You may use coloured fuel in stationary or portable engines, including generators and chainsaws.

Overdue Tax Return Payment Questions

 Why did I get a collection notice?

If you received a collection notice, our office has not received your tax payment for:

  • an audit assessment, or
  • taxes not remitted under the Motor Fuel Tax Act and/or Carbon Tax Act.

If you have any questions, please call the phone number indicated on the notice.

 Who can I contact regarding my debt?

Please call the phone number indicated on your collection notice. You may also call 1-800-663-7867 for general information.

 How do I know how much I owe?

If your collection notice or Notice of Assessment does not include a dollar amount, please call the phone number indicated on the notice.

 What should I do if I feel that I have already paid the amount shown as owing on the collection notice or Notice of Assessment?

You should obtain proof of payment (such as the front and back of a cancelled cheque or a letter indicating the account and amount paid) and then contact the phone number indicated on your collection notice. We may have processed your payment after the notice was sent out.

 What should I do if I disagree with the amount shown as owing?

Please call the phone number indicated on your collection notice. If you are still not satisfied, you have the right to appeal to the minister under the legislation.

For more information, please see Appeals (Bulletin GEN 002) (PDF).

 Why did I get a collection notice when I have already provided a nil return?

We may have received your nil return after the notice was sent out. Please call the phone number indicated on the notice if you have further questions.

 Do you accept credit card payments?

No, we do not currently accept credit card payments. The payment options are cheque, money order and eTaxBC.

 Can I make a payment arrangement if I cannot pay my debt in full?

There are a number of payment arrangements available to you. For details, please call the phone number indicated on the collection notice.

 What will happen if I cannot or do not pay my debt?

The province may initiate any of the following actions:

  • suspend or cancel appointments or registrations issued to you under the Motor Fuel Tax Act and/or the Carbon Tax Act,
  • place a notice of Crown Debt on your property,
  • issue a demand on your wages, bank account or other accounts,
  • set off funds owed to you by the provincial or federal government,
  • file a Certificate of Judgement in the B.C. Supreme Court,
  • seize and sell your assets, and
  • hold board members personally responsible for a corporation's debt under the Motor Fuel Tax Act and/or Carbon Tax Act.

 Why are you taking my income tax refund?

If you owe a debt to the Province of B.C., the province can offset monies owing to you from the Canada Revenue Agency.

Common errors taxpayers make when submitting tax returns and payments

 What are some common errors taxpayers make when submitting tax returns and payments?

There are a number of common errors taxpayers make in submitting tax returns and payments under the Motor Fuel Tax Act and/or Carbon Tax Act. The following is intended to help you avoid these errors.

  • Use the correct tax return for the correct tax rate for the reporting period (e.g. January 1, 2010 to June 30, 2010, or July 1, 2010 to June 30, 2011).
  • Sign the certification portion of the tax return.
  • Do not write in shaded areas of the tax return.
  • Do not send in a payment without also sending in a completed tax return.
  • Do not re-use a media number as it is unique for each reporting period for carbon tax returns.
  • If you have been assigned a filing frequency, send in a tax return even if you have no taxable activity or payment due.
  • Send in your tax return and payment on time.
    • If you send in your tax return and payment by mail, it is considered on time if the envelope is postmarked by Canada Post (or a national equivalent if outside of Canada) on or before the due date. A business postage meter mark in not sufficient. If you mail your tax return and payment on or near the due date, request Canada Post to postmark the envelope immediately.
    • If you deliver your tax return and payment by hand or courier, it is considered on time if the envelope is received by the ministry by the close of business (4:30 pm) on the due date.
  • When submitting an IFTA return, convert U.S. distances and fuel purchases to kilometres and litres, respectively (e.g. do not report in miles and gallons).
  • When filing a carbon tax inventory return, do not take an inventory allowance on each type of fuel. You can claim only one $250 inventory allowance regardless of the number of fuel types you are reporting on the inventory return.
  • Do not make changes to a current tax return to correct previous reporting errors (submit an amended tax return for that reporting period instead).
  • Inform the ministry of a change in the name or ownership of a business, and do not continue to report under the previous entity's account number.
  • If in doubt, contact the ministry at 1-877-388-4440.