Published: June 2001
Content last reviewed: September 2009
ISBN: 0-7794-1389-X (Print), 0-7794-1390-3 (PDF)
The information in this bulletin does not replace the law found in the Fuel Tax Act and related regulations.
This bulletin provides general information on the purchase, use, storage, labelling and handling of tax-exempt coloured fuel in Ontario.
For the purposes of this bulletin, coloured fuel is fuel to which a specific type and quantity of red dye has been added in accordance with the Fuel Tax Act and regulations.
Coloured fuel is exempt from Ontario fuel tax and may be used for non-taxable purposes only.
The use of coloured fuel in a licenced motor vehicle is prohibited.
Coloured fuel may be used for any purpose other than to: generate power in a licenced motor vehicle; operate a recreational vehicle, personal watercraft, boat or any other machine used or intended to be used principally for the pleasure or recreation of its owner or operator.
A licenced motor vehicle is any motor vehicle to which a number plate is attached as required under the Highway Traffic Act.
Coloured fuel may not be placed in a licenced motor vehicle, even if the motor vehicle is operated primarily in connection with the business of farming, construction, forestry, or mining.
In order to colour fuel in Ontario, a person must be registered with the Minister of Finance as a dyer. Only a fuel distributor designated by the Minister as a fuel tax collector or as a distributor of special products is entitled to be registered as a dyer.
Registered dyers are to colour fuel using only the dye provided by the Minister, in the manner and using the equipment, methods and procedures specified in the Act and regulations.
It is a serious offence to colour fuel in Ontario without proper authorization.
Coloured fuel may be purchased from most bulk fuel suppliers in Ontario.
While no special permits or authorizations are required under the Act to purchase or sell coloured fuel, no one may place or cause to be placed coloured fuel in the fuel tank of a licenced vehicle, or sell coloured fuel knowing that it will be used for taxable purposes.
Coloured fuel must be stored in separate storage facilities that are clearly marked to indicate that coloured fuel is stored therein.
The Ministry of Finance issues labels and tags which are to be used by any person who owns or operates any equipment used to colour, store, transport or deliver coloured fuel, for the purposes of identifying such fuel as coloured fuel.
Each identifying label or tag must be placed in a location where it is clearly visible under normal operating conditions.
Coloured fuel must not be mixed or combined with any other type or grade of fuel. Any person who does so is guilty of an offence and if convicted, is liable to fines and possible imprisonment.
Similar sanctions may be imposed on any person who destroys or removes the dye or any component of the dye in any coloured fuel.
Even if the colouring has been carried out in accordance with the Act and regulations, tax-exempt fuel that has been coloured in the United States or in another province is considered to be unauthorized fuel, subject to fuel tax at the same rate as non-coloured or clear fuel.
The Fuel Tax Act prohibits the use of unauthorized fuel in a licenced motor vehicle in Ontario.
As an exception, fuel coloured in the Province of Quebec in accordance with the Act and regulations is authorized for use in Ontario as coloured fuel, pursuant to an Ontario-Quebec Reciprocal Dye Agreement.
As a further exception, the Minister may authorize a registered dyer to colour fuel outside of Ontario under certain specific conditions
It has been the practice of the Ministry of Finance to permit coloured fuel use for any purpose in remote Northern locations. This includes any location situated north of the 51st parallel but excludes an eighty kilometre radius of Highways #618, #125, #599, #808 and Moosonee and Moose Factory.
Ministry of Finance inspectors are authorized to conduct roadside tests on licenced motor vehicles to verify that only clear fuel is in the fuel tank of that motor vehicle. In cases where coloured or unauthorized fuel is found in the fuel tank, the operator of the motor vehicle may be liable to penalties and fines.
In addition to roadside tests, Ministry of Finance inspectors may also inspect tank wagons, bulk fuel plants, retail stations, truck yards, farms, or any other location where business is carried on, to monitor compliance with the requirements of the Act and regulations.
Anyone convicted of an offence relating to the improper use, storage, labelling, or handling of coloured fuel in Ontario is liable to pay a set fine amount of $355, for an offence notice issued under the Provincial Offences Act (POA), or a fine amount that may range anywhere from $200 to $1,000,000, for an offence under the Fuel Tax Act. A number of offences are described below, along with the corresponding fine amounts:
|Offence||Set Fine (POA)||Fine (Act)|
|Motor vehicle containing coloured fuel||$355||up to $1,000|
|Unauthorized fuel in the fuel tank of motor vehicle||$355||up to $1,000|
|Refuse to permit detention or examination of motor vehicle||$355||up to $1,000|
|Refuse to permit fuel samples||$355||up to $1,000|
|Deliver coloured fuel into a motor vehicle||$355||up to $2,000|
|Sell coloured fuel for taxable use||$355||up to $2,000|
|Remove, break or alter a coloured fuel seal or a label||$355||up to $100,000|
|Improper storing and labelling of coloured fuel||n/a||up to $100,000|
|Destroy, remove or attempt to destroy or remove dye||n/a||up to $1,000,000|
|Mix or combine coloured fuel with any other fuel||n/a||up to $1,000,000|
|Refuse or neglect to dye fuel in accordance with the Act||n/a||up to $1,000,000|
In addition to fines, the Act provides the Minister with the authority to assess penalties for the improper use of coloured or unauthorized fuel equal to three times the tax that would be payable under the Act if the fuel were clear fuel sold to a purchaser in Ontario.
Subsequent penalties are equal to ten times the tax that would be payable under the Act if the fuel were clear fuel sold to a purchaser in Ontario. Payment of a fine, penalty, or both does not eliminate the liability for tax.
If this bulletin does not completely address your particular situation, please refer to the Fuel Tax Act and related regulations, visit our website at ontario.ca/finance or contact:
Ministry of Finance
Client Services Branch
Fuel Tax Program
33 King Street West
PO Box 625
Oshawa ON L1H 8H9