Motor fuel tax exemption on sales to First Nations

First Nations individuals and bands are generally exempt from motor fuel tax when they purchase fuel on First Nations land.

This page explains how the exemption applies and how certain fuel retailers who operate on First Nations land may qualify to purchase fuel exempt of security.

For the purpose of the exemption for First Nations:

• A First Nations individual is an individual who qualifies for the section 87 tax exemption under the Indian Act (Canada) or an equivalent provision in a treaty Final Agreement
• Band has the same meaning as in section 2 of the Indian Act (Canada)
• First Nations land means reserve land, shíshálh Lands, Westbank Lands, former reserve land within Treaty Lands, and former reserve land within Nisga’a Lands   

Note: Existing Modern Treaty Nation Final Agreements were amended to reinstate or continue the section 87 tax exemption for eligible treaty beneficiaries. See Modern Treaty Nations below.

On this page

• Exempt Fuel Retailer Program
• Tax-exempt sales to First Nations
• Documenting tax-exempt sales
• Record keeping requirements
• Partnerships
• Modern Treaty Nations
• Reporting requirements
• Refunds

Exempt Fuel Retailer Program

The Exempt Fuel Retailer Program allows retailers on First Nations land to purchase fuel exempt of security that will be resold tax-exempt to First Nations individuals and bands.

An exempt fuel retailer (EFR) is a fuel seller who operates on First Nations land and holds a valid Exempt Fuel Retailer (EFR) permit.  

As an EFR, you're authorized to purchase a specified percentage of certain types of fuel exempt of security. Your specified percentage is based on the tax-exempt sales you normally make to First Nations individuals and bands. The specified percentage may vary by the type of fuel and may be adjusted if your percentage of tax-exempt sales changes.

Exempt Fuel Retailer (EFR) permit

You may apply for an EFR permit if you meet all the following criteria:

1. You sell one or more of the following types of fuel:
   • Clear or coloured gasoline
   • Clear or coloured diesel
   • Propane
2. You sell from a permanent location on First Nations land (a retail gas station, or an uncrewed location such as a cardlock or keylock) 
3. You sell at least 10% of a type(s) of fuel listed above exempt of tax to First Nations individuals and bands

To apply for an EFR permit, you must complete an Application for Registration as an Exempt Sale Retail Dealer (ESRD) and/or Exempt Fuel Retailer (EFR) (FIN 262) (PDF, 320KB) for each physical location you plan to operate as an EFR on First Nations land.

EFR permits are not transferrable from one person to another and apply only to a specific location.

Issuing the permit

If you're approved for an EFR permit, we'll send you an agreement outlining the duties and conditions of your permit. You must sign and return the agreement to us before you'll be issued a permit.

For newly-issued EFR permits, you'll be required to use the electronic TAFT system to record your fuel sales to tax-exempt customers.

If you're refused an EFR permit, we'll send you a letter explaining why your permit was refused and how to appeal the decision if you disagree. If you're refused an EFR permit, you're not authorized to purchase any fuel exempt of security. However, you may continue to sell fuel to tax-exempt customers and apply for a refund of security paid. Refunds are discussed below.

Displaying the permit

You must display your EFR permit at each location where you sell fuel. The permit indicates the type(s) of fuel and specified percentage of each fuel type you're authorized to purchase exempt of security.

Suspension or cancellation of a permit

If your EFR permit is suspended or cancelled for not meeting the conditions of your permit, you cannot purchase any fuel exempt of security. If your permit is suspended, you must continue to file your monthly returns. If your permit is cancelled, you must file a final return and pay security on the volume of fuel you purchased exempt of security that is remaining in your inventory.

Purchasing fuel exempt of security

To purchase the specified percentage of each fuel type listed on your EFR permit exempt of security, at the time of purchase you must provide your fuel supplier with either:

• Your EFR number, fuel type(s) and specified percentage, or
• A copy of your EFR permit

Tobacco and Fuel Tax Exemption Simplification System (TAFT)

TAFT is an electronic system for documenting tax-exempt sales to eligible customers. It's available for use by EFRs. There's no cost to set up the system or for ongoing access or technical support. 

All newly-issued EFR permit holders must use TAFT to record their tax-exempt sales of fuel to First Nations individuals and bands. This is a condition of receiving the permit.

If you received your EFR permit before the use of TAFT was a condition, you may sign up to use TAFT at any time. Once you sign up, you'll use TAFT (instead of paper schedules) to record your tax-exempt sales. For more information, contact us at TobaccoTax@gov.bc.ca.   

Tax-exempt sales to First Nations

First Nations individuals and bands are generally exempt from motor fuel tax when they purchase fuel on First Nations land. To qualify for the exemption, the fuel purchased must be for the personal use of the First Nations individual or for the use of the band, and title to the fuel must pass on First Nations land.

Corporations or cooperatives with First Nations shareholders, tribal councils and band-empowered entities do not qualify for this exemption. Motor fuel tax applies to fuel purchases by such organizations, even if the sale occurs on First Nations land.

You must collect motor fuel tax at the appropriate tax rate on all types of fuel sold to customers who do not qualify to purchase fuel tax exempt or who do not provide the required documentation to obtain the exemption. 

Personal use

To qualify for the exemption, the fuel purchased must be for the personal use of the First Nations individual or for the use of the band. Personal use means for the beneficial use of the purchaser and includes purchases for use in the purchaser's sole proprietorship.

Personal use does not include:

• Purchases for business use in a corporation, cooperative, tribal council or band-empowered entity
• Purchases on behalf of a non-eligible person (a person who would not be entitled to the exemption if making the purchase directly), even if the non-eligible person will reimburse the First Nations individual
• Purchases where a non-eligible person is paying for fuel requested by a First Nations individual
• Purchases for resale to another person, even if that other person is eligible for the exemption

If you have reason to believe the fuel is not being purchased for the personal use of a First Nations individual, you must not sell tax-exempt fuel.

When title passes on First Nations land

Fuel purchased by a First Nations individual or band is exempt from motor fuel tax if title to the fuel passes on First Nations land. This includes fuel purchased on First Nations land and purchases where the fuel is delivered to First Nations land, provided title to the fuel passes on First Nations land.

For title to pass on First Nations land, the fuel must be delivered by the seller or by a common carrier under contract with the seller, and the seller must retain ownership of the fuel until it's delivered to the eligible purchaser on First Nations land.

Documenting tax-exempt sales

Sales to First Nations individuals

Generally, First Nations individuals (including citizens or members of a Modern Treaty Nation) who have a valid Certificate of Indian Status card or Temporary Confirmation of Registration Document (TCRD) are eligible to purchase tax-exempt fuel. Expired cards and documents are discussed below.

Note: First Nations individuals who are citizens or members of a Modern Treaty Nation are eligible to purchase tax-exempt fuel even if their Certificate of Indian Status card states they are no longer eligible for sales tax exemptions.

Certificate of Indian Status card

Indigenous Services Canada (ISC) issues a secure Certificate of Indian Status (SCIS) card to each individual registered as an Indian under the Indian Act (Canada) if they apply for the card. The Certificate of Indian Status, or status card, is still issued in some First Nations offices. All previously issued versions of the Certificate of Indian Status cards are valid until the renewal date on the card.

Each Certificate of Indian Status card bears the cardholder’s photograph, name, signature, and either a registration number or their band's name and number. The first three digits of the registration number is the band number. 

When presented with a Certificate of Indian Status card by an individual requesting exemption as a First Nations individual, you must determine the individual qualifies for exemption and follow the documentation procedures listed below:

1. If you're presented with a status card in person, check that the photograph on the status card is that of your customer
2. Complete the following on the Schedule of Sales of Tax-Exempt Fuels to First Nations (FIN 412/2) (PDF, 200KB):
   1. From the information on the status card, record the individual's name and either:
      1. The registration number or
      2. Their band's name and number
   2. Record the volume and type of fuel sold
   3. If the sale is at a retail gas station, obtain your customer's signature and ensure this signature matches the signature on the status card

If you're an EFR, you can use the electronic TAFT system (instead of the paper schedule) to record your sales of tax-exempt fuel. If you use the TAFT system, you do not obtain your customer's signature.

Temporary Confirmation of Registration Document (TCRD)

If an individual has recently applied for and has not yet received their Certificate of Indian Status card, you may accept their Temporary Confirmation of Registration Document (TCRD) issued by Indigenous Services Canada (ISC) as proof the individual qualifies to purchase tax-exempt fuel as a First Nations individual. If an individual provides you with a TCRD, they must also show a piece of government-issued photo identification, such as a passport, driver's licence or BCID card.

When presented with a TCRD, you must determine the individual qualifies for exemption and follow the documentation procedures listed below:

1. If you're presented with a TCRD in person, check that the photo identification matches your customer
2. Check that the information on the photo identification matches the information on the TCRD
3. Complete the following on the Schedule of Sales of Tax-Exempt Fuels to First Nations (FIN 412/2) (PDF, 200KB):
   1. From the information on the TCRD, record the individual's name and the registration number
   2. Record the volume and type of fuel sold
   3. If the sale is at a retail gas station, obtain your customer's signature and ensure this signature matches the signature on the photo identification

If you're an EFR, you can use the electronic TAFT system (instead of the paper schedule) to record your sales of tax-exempt fuel. If you use the TAFT system, you do not obtain your customer's signature.

Expired Certificate of Indian Status card or TCRD

You may accept an expired Certificate of Indian Status card or TCRD if the individual provides an additional piece of government-issued photo identification (such as a passport, driver's licence or BCID card) that matches the individual with the status card or TCRD.

This process is for verification purposes only. You do not need to record information from the additional identification or retain a copy of the additional identification.

If an individual presents you with a valid Certificate of Indian Status card or TCRD when purchasing an ongoing service (e.g. scheduled fuel deliveries) you do not need to ask for an updated Certificate of Indian Status card or TCRD after it expires. The individual continues to be eligible for the exemption and does not need to provide updated identification. 

Sales to bands

Direct sales

Purchases of fuel made in the name of a band (e.g. the purchase order or invoice is specifically made in the name of the band) on First Nations land are exempt from motor fuel tax.

For all such sales, you must complete the following on the Schedule of Sales of Tax-Exempt Fuels to First Nations (FIN 412/2) (PDF, 200KB):

1. Record the band's name and three-digit band number
2. Record the volume and type of fuel sold
3. If the sale is at a retail gas station, obtain the signature of the band's representative who takes possession of the fuel

If you're an EFR, you can use the electronic TAFT system (instead of the paper schedule) to record your sales of tax-exempt fuel. If you use the TAFT system, you do not obtain the signature of the band's representative who takes possession of the fuel.

Sales to authorized individuals

Purchases of fuel made on behalf of a band (i.e. the purchase order is not specifically made in the name of the band) on First Nations land are exempt from motor fuel tax. 

To make a purchase on behalf of a band, an individual must have written authorization from the band to act for the band. The authorization must show the band name and number, be signed by an appropriate band official, and state the fuel is for band use. The individual must also show a piece of government-issued photo identification, such as a passport, driver's licence or BCID card.

When presented with an individual's written authorization (original, photocopy, fax or digital copy) to act for the band, you must follow the documentation procedures listed below: 

1. Check that the individual's photo identification matches the name of the individual authorized by the band
2. Complete the following on the Schedule of Sales of Tax-Exempt Fuels to First Nations (FIN 412/2) (PDF, 200KB):
   1. From the written authorization, record the following:
      1. Name of the authorized individual
      2. Band's name and three-digit band number
   2. Record the volume and type of fuel sold
   3. If the sale is at a retail gas station, obtain the signature of the individual purchasing fuel on behalf of the band

If you're an EFR, you can use the electronic TAFT system (instead of the paper schedule) to record your sales of tax-exempt fuel. If you use the TAFT system, you do not obtain the signature of the individual purchasing fuel on behalf of the band.

Sales without the required documentation

If you cannot collect and record the above information, you must collect motor fuel tax from your customer. If your customer claims they're purchasing fuel on behalf of a friend or family member who's a First Nations individual, but your customer does not possess a Certificate of Indian Status card or TCRD in their own name, you must charge the tax. 

If you must collect the tax and your customer claims they're eligible for exemption, you may advise them to apply to us for a refund. Find information on how to claim a refund below.  

Record keeping requirements

This section includes specific record keeping requirements for retail gas station sales, cardlock operations, fuel deliveries, and sales to partnerships. For the procedures to follow when reviewing identification or band authorizations to complete these sales, as applicable, see Documenting tax-exempt sales above. 

Retail gas station located on First Nations land

If you operate a retail gas station located on First Nations land, you must record each tax-exempt sale at the time the tax-exempt sale is actually made using either:

• The TAFT system if you're an EFR who uses TAFT, or
• A Schedule of Sales of Tax-Exempt Fuels to First Nations (FIN 412/2) (PDF, 200KB)

Tax-exempt customers must be physically present at the time the actual sale is made. A proxy individual cannot purchase tax-exempt fuel on behalf of another person.

Cardlock operation located on First Nations land

If you operate a cardlock (uncrewed pump) located on First Nations land, you must ask your customers to show you their Certificate of Indian Status card, TCRD or band authorization before you provide them with an access card to obtain fuel exempt of tax.

You must record tax-exempt sales using either:

• The TAFT system if you're an EFR who uses TAFT, or
• A Schedule of Sales of Tax-Exempt Fuels to First Nations (FIN 412/2) (PDF, 200KB)

After month end, verify the total tax-exempt sales with the access cardholder, and record the total volume of each fuel type sold tax-exempt to each customer. Sales must be recorded for the month in which the sale occurs (i.e. not the billing or payment date).

No customer signatures are required, either at the time of sale or when you verify the total tax-exempt sales with the access cardholder after month end.

Fuel deliveries to customers located on First Nations land

If you deliver fuel (e.g. propane) to customers on First Nations land, you must ask your customers to show you their Certificate of Indian Status card, TCRD or band authorization (original, photocopy, fax or digital copy) before you provide fuel exempt of tax.

You must record tax-exempt sales on a Schedule of Sales of Tax-Exempt Fuels to First Nations (FIN 412/2) (PDF, 200KB). No customer signatures are required, and customers do not need to be physically present when you make the delivery if they've already shown you the above documentation.

You must also keep evidence that the fuel was delivered by you into a receptacle (e.g. fuel tank) located on First Nations land (e.g. bills of lading or similar documentation). You must keep records with the name of the First Nations land and the physical address where the exempt fuel was delivered.

Note: When making future fuel deliveries to the same customer, you're not required to ask them to show you their Certificate of Indian Status card, TCRD or band authorization again. You may rely on the documentation you retained to support the initial exempt delivery to support future exempt deliveries to that customer. However, you must continue to record the tax-exempt sales on a Schedule of Sales of Tax-Exempt Fuels to First Nations (FIN 412/2) (PDF, 200KB).

Partnerships

If your customer is a general partnership or limited liability partnership (LLP), you must retain documentation showing the First Nations partner's proportional interest in the partnership. Find information on partnerships below.

Records

In addition to documenting tax-exempt sales, you must keep records of your fuel purchases and maintain accurate inventory records. Your records must be available for inspection by provincial fuel inspectors and must be kept, at all times, at the location from which the tax-exempt sales of fuel are made.

Partnerships

Motor fuel tax exempt purchases by partnerships involving First Nations must meet all the criteria for the exemption for First Nations individuals or bands.

General partnerships and limited liability partnerships (LLPs)

General partnerships and LLPs with a First Nations partner(s) are entitled to an exemption from motor fuel tax on their fuel purchases on First Nations land. The exemption is proportional to that First Nations partner's interest in the partnership. Unless a written partnership agreement provides otherwise, each partner is considered to own a proportionate share of the partnership assets equal to that partner's interest in the partnership.

For example, a non-First Nations individual and a First Nations individual form a general partnership together. The First Nations individual has a 50% interest in the partnership. In this case, the partnership is entitled to a 50% exemption on its fuel purchases on First Nations land provided all the criteria for exemption are met.

Limited partnerships

Limited partnerships in which all the partners are First Nations individuals or bands are entitled to a full exemption from motor fuel tax provided all the criteria for exemption are met.

Limited partnerships in which one or more of the general or limited partners are First Nations individuals or bands may or may not qualify for exemption from motor fuel tax, depending on the terms of the partnership agreement.

Unless a limited partnership agreement provides otherwise in writing, any transaction involving the limited partnership is considered to be a transaction with the general partner.

For example, if the partnership agreement does not identify the ownership of assets and the general partner is a First Nations individual or band, then the entire purchase of fuel on First Nations land is fully exempt from motor fuel tax provided all the criteria for exemption are met.

If the limited partnership agreement does not state who owns the partnership assets where the limited partner is a First Nations individual or band and the general partner is not, then the purchase of fuel on First Nations land is not exempt from motor fuel tax.

Modern Treaty Nations

Modern Treaty Nation beneficiaries

The treaty Final Agreements of the following Modern Treaty Nations were amended to reinstate or continue the treaty tax exemption for eligible treaty beneficiaries. This means that the motor fuel tax exemption became applicable to eligible Modern Treaty Nation beneficiaries on certain lands as outlined in the table below. As of January 1, 2024, all First Nations individuals are exempt from motor fuel tax on purchases made on First Nations land.

As noted above, First Nations individuals who are citizens or members of a Modern Treaty Nation are eligible for this exemption on or after the effective date of the amendment to their Final Agreement, even if their Certificate of Indian Status card states they are no longer eligible for sales tax exemptions.

First Nations individuals who paid motor fuel tax (or carbon tax) when they were eligible for an exemption may qualify for a refund.

Modern Treaty Nation governments

The following Modern Treaty Nation governments have a unique taxation structure that is set out in their treaty arrangements with Canada and B.C.

Modern Treaty Nation governments do not qualify for the motor fuel tax exemption on First Nations land, so they pay motor fuel tax unless a specific exemption applies.

Modern Treaty Nation governments may apply for a refund of motor fuel tax paid under certain circumstances. For more information, see the agreements listed in the table above. Find information on how to claim a refund below.

Reporting requirements

Reporting and remitting tax – EFRs

You must report your inventory, purchases and sales, for the types of fuel for which you've been appointed an EFR, and remit any tax that's due on those sales to us by the 15th day of the month following the month you sold the fuel. For example, if you sell fuel anytime during the month of November, you must file a tax return and remit any tax due by December 15.

Note: If you have no sales during a month, you're still required to submit your tax return. If you identify an error in a tax return from a previous reporting period, you must submit an amended return for that reporting period.

If you use the TAFT system, complete the Exempt Fuel Retailer tax return online using eTaxBC.

If you do not use the TAFT system, file a Tax Return – Exempt Fuel Retailer (FIN 412) (PDF, 260KB) and submit your Schedule of Sales of Tax-Exempt Fuels to First Nations (FIN 412/2) (PDF, 200KB) at the same time. Contact us if you have a cardlock location and are unable to submit your schedule at the same time as your return.

You may file paper tax returns and schedules by mail or by courier. If you send in your return and payment by mail, they're considered on time if the envelope is postmarked by Canada Post on or before the due date. A business postage meter mark is not sufficient. If you hand deliver your return and payment, or send them by courier, they're considered on time if we receive them by the close of business at 4:30 pm (Pacific Time) on the due date.

You may also remit taxes due online using eTaxBC. Payments are considered on time if they're posted to eTaxBC by 11:59 pm (Pacific Time) on the due date.

If your tax return and payment are not received on time, penalties and interest may be applied. If the due date falls on a weekend or statutory holiday in B.C., your return and payment are due by 4:30 pm (Pacific Time) on the first business day after the due date.

Reconciling exempt sales with purchases – EFRs

To reconcile your exempt purchases and sales:

• If you use the TAFT system, complete the Exempt Fuel Retailer tax return online using eTaxBC
• If you do not use the TAFT system, complete the Tax Return – Exempt Fuel Retailer (FIN 412) (PDF, 260KB)  

If the actual percentage of fuel you sold exempt of tax is greater than the percentage of fuel you purchased exempt of security, you're eligible for a refund of security on the difference in sales volumes. If the actual percentage of fuel you sold exempt of tax is less than the percentage of fuel you purchased exempt of security, you must remit the additional tax you collected to us.

Note: If you plan to purchase fuel where security is paid from outside one of the transit regions and transport and resell it in one of the transit regions, you must contact us. 

Reporting tax on sales invoices

You must report the amount of motor fuel security or tax charged on your sales invoices if you sell fuel:

• From a bulk storage facility, cardlock or terminal rack
• For resale to another fuel seller
• To a registered consumer
• To an end purchaser who's purchasing more than 45 litres of coloured fuel
• To a customer who requests an invoice

The invoice must show all the following:

• Date of the sale
• Your name and address
• Location of the sale if different than above and, if applicable, where the fuel was delivered
• Name and address of the person you sold the fuel to
• Quantity of each type of fuel sold
• Rates for motor fuel tax for each type of fuel sold, as separate lines or columns on the invoice
• If the fuel is coloured, indicate as "marked" or "dyed", and show the price of the coloured fuel per unit of sale. For more information, see Bulletin MFT-CT 003, Coloured Fuels and Other Substances (PDF, 210KB)

Refunds

Deputy collectors and retail dealers

Deputy collectors (fuel suppliers) must pay security when they purchase fuel for sale to an EFR or other retail dealer. If you're a deputy collector and you sell fuel exempt of security to an EFR, you may apply for a refund of the security you paid.

Retail dealers must pay security on fuel not purchased under an EFR permit. If you're a non-EFR retail dealer and you sell fuel to a tax-exempt customer, you may apply for a refund of the security you paid.

The refund amount is based on the difference between the amount of security you paid on the fuel and the amount of security or tax you collected. For information on how to claim a refund, see Bulletin MFT-CT 007, Refunds for Deputy Collectors and Retail Dealers (PDF, 160KB).

Purchasers – First Nations individuals or bands

If you're a First Nations individual or band and a fuel seller charges motor fuel tax or carbon tax on your purchase of fuel on First Nations land, you may apply for a refund.

To apply for a motor fuel tax refund, complete the Application for Refund of Motor Fuel Tax – Purchaser of Fuel (FIN 147) (PDF, 330KB).

To apply for a carbon tax refund, complete the Application for Refund of Carbon Tax – Purchaser of Fuel (FIN 108) (PDF, 240KB).

Purchasers – Modern Treaty Nation governments

Modern Treaty Nation governments may apply for a refund of motor fuel tax paid under certain circumstances. For more information, see the agreements listed in the table above.

To apply for a refund, the Modern Treaty Nation must complete the Application for Refund of Motor Fuel Tax under the Motor Fuel Tax Act, Nisga’a Nation Taxation Agreement and Other First Nations Treaty Taxation Agreements (FIN 413/NNMFT) (PDF, 270KB).