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Motor fuel tax and carbon tax exemptions

Publication date: April 1, 2023

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 identity 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 and 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 international air service that is a registered consumer
  • Marine bunker fuel purchased for and used in the internal combustion engine of a ship
  • Marine diesel fuel purchased for and used in a 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 Liquefied Petroleum Gas):
    • Purchased in pre-filled or refilled cylinders (28 litres)
    • Used in a residential dwelling if certain conditions are met
    • Used by a qualifying farmer for a farm purpose if certain conditions are met
    • Learn about claiming exemptions for propane in the bulletin Propane Exemptions (MFT 014) (PDF, 265KB)

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 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.

Partial exemption from carbon tax for greenhouse growers

Effective April 1, 2023, eligible greenhouse growers can claim a partial exemption from carbon tax on natural gas and propane they use for an eligible purpose.

For more information, see our partial exemption from carbon tax for greenhouse growers page.

Appeals

You may be able to appeal if you disagree with an action we have taken or a decision we have made.

For example, if you are refused to be appointed as a collector, you can appeal  directly to the minister, and if you still disagree, appeal to the courts.

Request a refund

If you're eligible for an exemption but have already paid tax, you can apply for a refund.

If you don't qualify for a point of sale exemption but use fuel for a non-taxable purpose, you may still be eligible for a refund of the motor fuel tax and/or carbon tax you paid.

Contact information

Contact us with your questions about the motor fuel tax or carbon tax.

Our hours of operation are Monday through Friday,
8:30 am - 4:30 pm.

Toll Free (within Canada and the U.S.A.):
1-877-388-4440

Phone
1-250-410-0373
Email
CTBTaxQuestions@gov.bc.ca