Fuel Tax

As announced in the 2014 and 2015 Ontario Budgets, the government will propose amendments to the Highway Traffic Act that would modernize, by 2016, the treatment of certain unregistered road‑building machines that use public roads and highways. The government is currently reviewing potential registration and licensing requirements to be imposed on some of these vehicles, developing a registration process and meeting with various stakeholders to receive input on this measure. Learn more.

If you operate an internal combustion engine that uses clear diesel fuel, you will pay tax on the fuel you buy.

Read on: gasoline tax including aviation fuel and propane

Who pays fuel tax?

Every consumer who buys clear diesel fuel in Ontario pays fuel tax to a retailer.

Fuel tax is collected at the wholesale level and is included on the invoice to the retailer. The retailer, in turn, recovers the tax amount when the sale is made to the consumer. Fuel tax is included in the price you pay at the pump and, unlike the Harmonized Sales Tax, does not appear as a separate line item on your receipt.

Some groups do not have to pay fuel tax and can ask for a refund. They are:

  • businesses that hold a fuel acquisition permit
  • members of the diplomatic corps
  • visiting armed forces.

The fuel tax exemption for biodiesel was repealed effective April 1, 2014, making biodiesel taxable in the same way as clear diesel fuel.

Read on: fuel acquisition permits

Tax amount

The fuel tax rates are:

  • 14.3¢ per litre
  • 4.5¢ per litre for railway equipment.

Data: historical fuel tax rates

Coloured fuel

Tax‑exempt fuel has been dyed red and carries a chemical marker to aid in the enforcement of the Fuel Tax Act. The dye is supplied by the Minister of Finance and added to fuel only by registered dyers.

Data: historical dye costs

Coloured fuel may be used in:

  • heating, lighting or cooking
  • generating electricity
  • unlicensed construction, forestry, mining, farm and other business equipment
  • operating commercial marine vessels
  • auxiliary equipment of a vehicle where the equipment has its own separate fuel tank
  • operating railway equipment provided that the operator is registered with the Ministry of Finance and pays fuel tax on all fuel used in its railway operations.

First Nations individuals who are registered under the Indian Act (Canada) and First Nations bands may use coloured fuel in licensed vehicles where the fuel is acquired on a reserve.

Coloured fuel is not permitted to be used in a motor vehicle required to be licensed under the Highway Traffic Act.

Read on: coloured fuel

Registration

You need to register with the province if you intend to conduct business as a:

  • collector / wholesaler who collects tax
  • importer
  • exporter
  • fuel dyer
  • manufacturer
  • interjurisdictional transporter of fuel in bulk into or out of Ontario
  • operator of commercial vehicles travelling into or out of Ontario (see below for International Fuel Tax Agreement (IFTA) licensing information).

Is there a list of registrants holding valid designations under the Fuel and Gasoline Tax Acts? See the fuel and gasoline tax registrant list.

Fuel used by railways in Ontario

All railways operating in Ontario as part of a public transportation system must register with the Ministry of Finance as a registered consumer. This includes railways that commercially transport goods or passengers.

Coloured or clear fuel can be used in railway locomotives.┬áRegardless of the fuel used, the tax rate is 4.5 cents per litre and the tax must be remitted by the railway operator with their Fuel Tax Railway Return.

Filing a fuel tax return

Each month the Ministry of Finance will send a personalized return to complete. If you did not have any activity during the reporting period you still need to complete a return.

Didn't get a return this month? Please call the Ministry of Finance at 1 866 ONT-TAXS (1 866 668‑8297).

You can file your return:

  • online, using ONT‑TAXS online
  • by mail to: Ministry of Finance, 33 King Street West, PO Box 620, Oshawa ON L1H 8E9
  • in person at any Ministry of Finance tax office(in the drop boxes provided) or at a ServiceOntario location.

Due dates

Registered manufacturers must provide their completed return to the ministry by the 25th day of the second month following the month to which the return relates.

Other registrant's (collector, importer, etc.) tax returns are to be sent to the ministry by the 25th day of the month following the last day of the reporting period.

How to complete your fuel tax return

Do you have a qualified motor vehicle that travels into/out of Ontario?

If you operate a qualified motor vehicle travelling into or out of Ontario you may register under the International Fuel Tax Agreement (IFTA) to obtain an IFTA license and decals to display on your vehicle.

Read on: International Fuel Tax Agreement (IFTA)

If the vehicle is not licensed under IFTA and considered to be a qualified vehicle, then a one‑time permit must be purchased from each province or state in which you intend to travel.

Data: single trip permit agencies

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