Gasoline Tax in Ontario

Bulletin GT 1-2003
Published: June 2007
Content last reviewed: September 2009
ISBN: 1-4249-0234-7 (Print), 1-4249-0236-3 (PDF), 1-4249-0235-5 (HTML)

  • This bulletin provides an overview of the administration of the Gasoline Tax Act (Act) and the collection of tax in Ontario on gasoline, aviation fuel, and propane.
  • Products commonly known as diesel, fuel oil and kerosene are taxed separately under the Fuel Tax Act.
  • This bulletin provides general information and is not a substitute for the legislation.

Contents

Definitions

Gasoline

"gasoline" means any gas or liquid, other than methanol and natural gas, that may be used for the purpose of generating power by means of internal combustion and includes,

  1. aviation fuel, but only when it is used or intended to be used to generate power by means of internal combustion in a vehicle other than an aircraft,
  2. any of the products commonly known as diesel fuel, fuel oil, coal oil or kerosene, but only when the product is mixed or combined with a gas or liquid that is gasoline,
  3. every product that is otherwise excluded from this Act by the regulations, but only when the product is mixed or combined with a gas or liquid that is gasoline,
  4. ethanol that is or is intended to be mixed or combined with a gas or liquid that is gasoline but only if there is a requirement under Ontario Regulation 535/05 (Ethanol in Gasoline) made under the Environmental Protection Act or another statutory requirement that ethanol be mixed or combined with a gas or liquid that is gasoline, and
  5. any other substance except methanol and natural gas that is mixed or combined with a gas or liquid that is gasoline.

Aviation Fuel

"aviation fuel" means any gas or liquid that is sold to be used or is used to create power in an aircraft and any product that is designated to be aviation fuel by the regulations.

Propane

"propane" means any product commonly known as liquefied petroleum gas that conforms to Grade 1 or Grade 2, as described in the Standard CAN/CGSB-3.14-M88 of the National Standards of Canada as published by the Canadian General Standards Board or that conforms to such other liquefied petroleum gas standard as is published in replacement thereof by the Canadian General Standards Board and includes any substance added thereto.

Gasoline in bulk, Aviation Fuel in bulk, or Propane in bulk

"gasoline in bulk, aviation fuel in bulk, or propane in bulk" means gasoline, aviation fuel or propane stored, transported or transferred by any means other than in a fuel tank of a motor vehicle or aircraft in which gasoline, aviation fuel or propane for generating power in the motor vehicle or aircraft is kept.

Purchaser

"purchaser" means a person who, within Ontario, for their own self or as agent for another, purchases or receives delivery of gasoline, aviation fuel or propane for the person's own use or consumption or for use or consumption by others at the person's expense.

Tax Collectable

"tax collectable" means the tax a person is required to collect on sales or delivery in Ontario of gasoline, aviation fuel, and propane.

Tax Payable

"tax payable" means the tax a person is required to pay as a purchaser of gasoline, aviation fuel, and propane.

Tax Rates

Rates in Effect at this date

The Act imposes a tax on a purchaser at the rate of:

  • 14.7 cents per litre of unleaded gasoline
  • 17.7 cents per litre of leaded gasoline
  • 4.3 cents per litre of propane
  • 2.7 cents per litre of aviation fuel

Exemptions

Exempt Persons

The following persons are exempt by regulation from payment of gasoline tax:

  • persons serving in or employed by a diplomatic or consular mission, high commission or trade commission, their spouses and families as authorized by the Department of External Affairs Canada if such persons are not Canadian citizens or "permanent residents" of Canada as defined in the Immigration Act (Canada) and if such persons are assigned to duty from the state they represent and are not engaged locally by the mission or commission,
  • Indians and Bands [as defined in the Indian Act (Canada)] who acquire, on a reserve, gasoline, aviation fuel, or propane, for their exclusive use,
  • visiting Armed Forces with respect to gasoline or aviation fuel used in their service vehicles, aircraft and vessels.

Please see "Special Programs", for more on the exemption for Indians and Bands.

Tax Collection System

Overview

Ontario's gasoline tax is a direct tax imposed on consumers at the time of purchase.  An amount on account of gasoline tax is collected by ministry-designated collectors and registered importers from the wholesalers and retailers to whom they sell gasoline.  Such amounts are then remitted monthly to the minister.  By charging their customers tax, wholesalers and retailers who are not collectors or importers, reimburse themselves for amounts paid to their suppliers.

The Ministry of Finance's administrative policies and procedures are intended to capture information on the total amounts of gasoline, aviation fuel, and propane manufactured in, imported into, exported from, and sold in Ontario.  The purpose of this information is to determine the amount of taxable consumption in Ontario and whether the correct taxes are being reported and paid.

To capture this information, it is necessary to register all refiners, importers, exporters, interjurisdictional transporters, and those wholesalers designated as collectors.

See "Additional Information" regarding how to apply for registration.

Designation of Tax Collectors

Collectors are wholesalers designated in writing by the minister and act as agents of the minister.  To qualify for designation as a collector, a wholesaler must:

  • have sales of gasoline, aviation fuel or propane at wholesale during the twelve- month period before the designation of not less than 51 per cent by volume of the person's total sales in Ontario of gasoline, aviation fuel or propane
  • maintain average Ontario wholesale sales at 51 per cent or more
  • not exceed six consecutive months without sales or deliveries of gasoline, aviation fuel, or propane for resale in Ontario to retain collector designation, and
  • post security of the greater of $1 million or an amount equal to three months average tax collectable and payable.

Mandatory Registration – Manufacturers

Any person who manufactures, blends, modifies or produces gasoline, aviation fuel or propane for distribution, sale or storage in Ontario, must register with the minister.

Mandatory Registration – Importers

Any person who brings or causes to be brought into Ontario gasoline, aviation fuel, or propane, in bulk, must be registered with the minister as an importer.  A registered importer must post security in an amount specified by the minister.

Exception for imports from outside Canada

As an exception, importers who are not registered may, upon entry into Ontario from outside Canada, pay to the minister an amount equal to the tax.  This amount is payable by certified cheque, bank draft, or money order, at the time of entry.  The Canada Border Services Agency (CBSA) collects this amount for Ontario at border entry points.

Mandatory Registration – Exporters

Any person who takes or causes to be taken from Ontario gasoline, aviation fuel, or propane, in bulk, must be registered with the minister as an exporter.  An exporter must post security in an amount specified by the minister.

Mandatory Registration - Interjurisdictional Transporters

Any person who engages in the transportation or transfer of gasoline, aviation fuel, or propane, in bulk, inside and outside Ontario, by motor vehicle, vessel, railway or pipeline must be registered with the minister as an Interjurisdictional Transporter of Petroleum Products (ITPP).

When transporting products for an exporter or importer, the ITPP must carry a true copy of the registration certificate of the exporter or importer, for whom the product is being transported.

If transporting product from outside Canada for an unregistered importer, the ITPP is deemed to be the importer and must remit the security and deposit and file the return required by an unregistered importer.

For more information, please refer to Ontario Tax Bulletin FT/GT 2-2003 - Requirements for Interjurisdictional Transporters.

Collecting, Reporting and Remitting Tax

Collection and Remittance of Tax

Designated collectors and registered importers are required to collect and remit gasoline tax to the minister on the 21st day of the month following the month of sale.

Accelerated Remittance Procedure

Effective January 1, 1999, Ontario implemented an accelerated remittance program for "large gasoline tax collectors" (i.e., those who remitted tax of more than $36 million in the previous calendar year).

Large Gasoline Tax Collectors

For a given month, large tax collectors are required to remit two tax instalments, each equal to one-half the tax collectable and payable for the reporting month. Instalment payments are due on the last day of the current reporting month and on the 15th day of the next reporting month.

Large tax collectors must file a monthly gasoline tax return relating to a given month,  by the last day of the following month, reconciling the tax remitted (by instalment) to the actual amount of tax collectable and payable.  This return must include an adjusting payment if the tax collectable and payable for the reporting month exceeds the total remitted by instalments.  In the event the instalments exceed the tax collectable and payable for the reporting month, the overpayment is set off against the first instalment for the next reporting month.

Manufacturers

Manufacturers of gasoline, aviation fuel or propane must deliver a return regarding gasoline, aviation fuel and propane by the 21st day of the second month following the reporting period.  If the manufacturer also reports products taxed under the Fuel Tax Act, a single combined return will be accepted if filed by the 25th day of the second month following the reporting periods.

Registered Importers

Registered importers remit to the minister the tax collectable and tax payable together with a return, by the 21st day of the month following the month of import.

Propane Dealers

Ministry-designated propane dealers acquire propane exempt of tax and remit to the minister the tax collectable on sales of propane to purchasers for use in licenced motor vehicles.  They remit and file a return by the 21st day of the month following the month in which such sales occurred.

Interjurisdictional Transporters

Interjurisdictional transporters must file a return reporting all movements of gasoline, aviation fuel, or propane, by the 21st day of the month following the month in which the gasoline, aviation fuel or propane was transported.

Exporters

Exporters must file a return reporting all gasoline, aviation fuel, or propane delivered outside Ontario, by the 21st day of the month following the month of export.

Offences and Penalties

Failure to Collect

A collector, importer, wholesaler, or retailer who fails to collect the required tax may be assessed a penalty equal to 110 per cent of the tax not collected.

The Act provides that any collector, importer, wholesaler, or retailer who fails to collect the tax required, is liable upon conviction, to pay a fine equal to three times the tax not collected.

Failure to File

Returns not filed, filed late or with less than the required amount of tax, may result in assessed penalties of 10 per cent of the tax collectable and 5 per cent of the tax payable.

Excess Unverifiable Losses

The Act provides for the assessment of a penalty where product loss by a collector is found to be in excess of a prescribed threshold. The penalty, if assessed, will be equal to the amount of tax that would have been collectable if the excess unverifiable product loss had been product sold to a purchaser in Ontario.

Over a 36 month period, tax collectors are required to reconcile the volume of products in opening inventories, received, or manufactured, with the volume of product which can be accounted for by way of taxable sales, tax-exempt sales, exports, closing inventories and losses from known causes (theft, fire, contamination, reported spillage). Unverifiable losses result when product cannot be accounted for in the reconciliation.

Security Requirements

New Collectors or New Registrants

A new business that applies to be designated as a collector or registered as an importer or exporter must provide security in the amount specified in the legislation. For example, the security requirement for a collector is $1 million or the average three months tax, whichever is greater.

Reorganization, Amalgamation, Change in Control or Ownership

A new legal entity which results from the reorganization of an existing collector or registrant, or any entity that undergoes a substantial change in ownership or control, must apply to the ministry for a new designation or registration certificate and must provide security.

Designations or Registrations Under Both the FTA and GTA

Security posted by a collector designated, or by a person registered, with the minister under both the Fuel Tax Act (FTA) and the Gasoline Tax Act (GTA) is to be sufficient to cover the combined security requirements of both Acts.

Acceptable Forms of Security

Forms of security acceptable to the minister are irrevocable letters of credit or surety bonds from Ontario financial institutions, and cash. Cash deposited as security does not earn interest.

Security is necessary to protect against the risk of revenue loss due to business failure or tax evasion.

Refunds (Four year time limit applies)

Business Use of Unlicenced Equipment

A refund of the gasoline tax paid may be claimed by a purchaser when gasoline is used:

  • in any equipment or vehicle that is not licensed or required to be licensed under the Highway Traffic Act and operated in Ontario by any business, industry or institution; and
  • where such equipment or vehicles are not operated principally for the recreation or pleasure of its owner or operator.

Note Gasoline used outside of Ontario does not qualify for an Ontario tax refund.

Gasoline Used as Aviation Fuel

Where gasoline is used as "aviation fuel" and tax was paid at the gasoline tax rate of 14.7 cents per litre, the purchaser is entitled to claim a refund of the tax differential of 12 cents per litre (i.e. the gasoline tax rate of 14.7 cents less the aviation fuel tax rate of 2.7 cents).

Supporting documents and records to establish the use of gasoline in an aircraft must be submitted with the refund application.

Allowance to Retailers

Eligible gasoline retailers may claim a tax refund in the form of an allowance of 0.21 per cent of the tax paid on gasoline sold at retail.  This refund allowance represents the tax paid by the retailer on gasoline lost through evaporation, temperature changes or minor spillage.  

An eligible retailer must:

  • have paid tax to its supplier on gasoline purchases
  • not be a collector or an employee of a collector designated under the Act, and
  • be licensed under the Technical Standards and Safety Act, 2000.

However, an employee of a collector may be eligible to apply for the allowance, if, by reason of an agreement, the employee is held responsible for, and must bear the cost of all gasoline losses and shortages they have sold at retail.

The refund allowance is calculated only on the quantity of gasoline actually sold at retail, but not on gasoline:

  • purchased on consignment, unless the retailer is responsible for and pays the consignor for all consignment losses
  • used in unlicensed equipment by the retailer, or
  • sold at wholesale.

Inventory records and receipted invoices showing the quantity of gasoline and the date upon which gasoline tax was paid must be submitted with the refund application.

Ambient Temperature Allowance

Most gasoline suppliers use measuring and dispensing equipment which automatically converts gasoline litres to reflect a volume that the product would occupy if the gasoline temperature was 15 degrees celsius.  This is known as "volume corrected" measurement.

A gasoline retailer operating without temperature adjusting dispensing equipment, and who acquires product on a "volume corrected" basis from a supplier, may have paid more tax on the higher "volume corrected" quantity than it would recover from retail sales of gasoline (at an ambient temperature) to consumers.  In such cases, the gasoline supplier may provide an allowance, calculated at 0.35 per cent of the tax paid on gasoline purchases, to the retailer.

If a gasoline supplier does not provide an allowance at the time of the sale, the retailer may be eligible to claim an ambient sales refund directly from the ministry.  However, the retailer must demonstrate that, as a result of ambient sales, tax paid to their supplier exceeds the amount of tax received from its retail consumers.

Note:  Applicants must reduce an ambient sales refund claim by the amount of any allowance to retailers claim received for the same period.  In effect, a retailer is NOT entitled to claim both tax refunds on the same quantities of gasoline.

For further details please refer to Ontario Tax Bulletin FT/GT 2-2000 – Volume Corrected Measurement of Petroleum Products and the Computation of Ontario Fuel and Gasoline Taxes – Ambient Temperature Allowance/Refund Provisions.

Power Take Off Auxiliary Equipment

The Act provides for refunds of the tax paid on gasoline used in Ontario to operate power takeoff (PTO) auxiliary equipment of a motor vehicle.

In cases where a fuel meter measures the quantity of fuel supplied to PTO equipment, readings from this meter are used to calculate the tax refund amount.  Otherwise, refund claimants calculate PTO tax refunds on the basis of ministry-approved allowances derived from equipment manufacturers' fuel consumption specifications.

In order for a claimant to be eligible for a PTO tax refund, the following conditions apply:

  • the PTO equipment must use fuel from the same fuel tank that supplies fuel to the engine propelling the vehicle
  • the power from the PTO equipment is not used to propel the vehicle on a highway
  • the vehicle is not used for the transportation of passengers or for the pleasure or recreation of the owner or operator, and
  • the PTO refund application and schedules must be filed within four years of the date on which the gasoline tax was paid.

For interjurisdictional carriers, PTO refunds are proportionate to travel in Ontario.

For details on PTO refunds relating to Interjurisdictional Carriers, please refer to Ontario Tax Bulletin FT/GT 4-2000 - Power Take Off Tax Refunds for Interjurisdictional Carriers.

Bad Debts and Loss of Product

Gasoline tax collectors, wholesalers and retailers are eligible to apply for a refund of tax paid, if the tax has been paid on gasoline, aviation fuel, or propane that has been:

  • sold and all or part of the sale price has not been paid and has become an uncollectable debt, or
  • lost, stolen, destroyed or contaminated and cannot be sold or used.

No refunds will be paid if:

  • any portion of the sale price has been assigned by private contract, with or without recourse other than for security purposes, to a person other than the minister
  • the refund claimant did not hold a valid licence with respect to the handling of taxable product at the time of sale or loss, destruction, theft or contamination of the taxable product
  • the refund claimant has already received a refund of the tax or is otherwise entitled under the Act or its regulations to receive or apply for a refund or an allowance for the tax being claimed
  • the refund claimant and the debtor were not dealing at arm's length at the time of the sale of the taxable product
  • the minister is not satisfied that:
    • the debt is uncollectable (in the case of a bad debt refund), or
    • the taxable product cannot be used or sold, and
    • compensation relating to the refund has not been receive

or

  • the refund application was not made within the designated four-year time limit.

For further details please refer to Ontario Tax Bulletin FT/GT 2-99 – Tax Refunds - Bad Debts and Lost, Destroyed, Stolen or Contaminated Product.

Registered Exporters

Registered exporters may apply for a refund of Ontario gasoline tax paid on gasoline, aviation fuel, or propane exported from Ontario.  Where those products are for direct and immediate export to the U.S., the designated collector may allow a credit when certain conditions are met.

Special Programs

Gasoline Sales to First Nations

In recognition of section 87 of the Indian Act (Canada), First Nations individuals who are Registered Indians and Bands who purchase gasoline on a reserve for their exclusive use are exempt from payment of gasoline tax.

Gasoline Card Exemption Program

This exemption is administered by the ministry issuing gasoline certificates of exemption (known as gas cards) to First Nations persons. The gas card is presented by the holder to an approved reserve retailer who sells the gasoline to the First Nations person. The retailer uses the card to imprint a sales voucher which is used to either support a tax refund claim submitted directly to the ministry or to a designated collector.

Ontario/Quebec Tax Settlement Agreement

An agreement between the governments of Ontario and Quebec provides for the settlement of tax on the transfers of gasoline, propane, and aviation fuel between the two provinces. This ensures that the correct amount of tax is paid to the province in which the product is consumed. The agreement reduces the tax remitting, refund, and administrative requirements for suppliers who engage in cross border transfers of gasoline, propane and aviation fuel. These importers, exporters, and interjurisdictional transporters are still required to register with, and report to the minister.

Additional Information

If this bulletin does not completely address your particular situation, please refer to the Act and related Regulations. To obtain additional information, refund forms and guides, or to apply for registration visit our website at ontario.ca/finance or contact:

Ministry of Finance
Client Services Branch
Gasoline Tax Program
33 King Street West
PO Box 625
Oshawa ON  L1H 8H9

  • 1 866 ONT-TAXS (1 866 668-8297)
  • Fax: 905 433-5680
  •  800 263-7776 for teletypewriter (TTY)
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