Fuel Tax

The 2015 Ontario Budget received Royal Assent on June 4, 2015. The government announced 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.

This overview provides general information on Ontario's fuel tax rules; it should not be considered as a substitute for the Fuel Tax Act and Regulations.

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

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The fuel tax exemption for biodiesel was repealed effective April 1, 2014, making biodiesel taxable in the same way as clear diesel fuel.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

Fuel tax refunds (four year time limit applies)

Fuel tax rates

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

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. Regardless 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.

Who needs to register?

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 that may be subject to the International Fuel Tax Agreement (IFTA) registration. See below for IFTA licensing information.

For more information on interjurisdictional transporters, please refer to Ontario tax bulletin FT/GT 2 2003 – Requirements for Interjurisdictional Transporters.

Before issuing permits, registrations or designations, the Minister of Finance (minister) may impose reasonable conditions, limitations and restrictions on those permits, registrations or designations.

As an exception, importers who are not registered must, 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.

To help identify persons authorized by the minister to sell and distribute fuel and gasoline products, the ministry maintains a list of persons registered under the Act. Anyone can subscribe to email alerts to stay informed of changes to registrant status (e.g., authorized, suspended and cancelled registrations). View the registrant list.

To inquire about registering under the Act:

  • call the Ministry of Finance at 1 866 ONT‑TAXS (1 866 668‑8297)
  • when prompted, say 'fuel'
  • you will be transferred to a representative who can explain the registration process and requirements.

View a list of applications

Will I have to post security?

Before the minister issues you a permit, registration certificate or a designation, you may need to provide security through a surety bond or letter of credit.

In most cases, the amount of security required is an amount equal to three months' average tax collectable and payable or $1 million, whichever is greater.

Acceptable forms of security include:

  • Irrevocable Letters of Credit issued by and redeemable at an Ontario branch of a Canadian Chartered Bank in the standard form approved by the ministry.
  • Surety Bonds issued by financial institutions registered with the Financial Services Commission of Ontario to deal in surety. See list of registered financial institutions.
  • Cash (interest will not be paid).

Irrevocable Standby Letter of Credit

Surety Bond (Surety Association of Canada approved)

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 new or revised security to reflect the new designation.

How do I file fuel tax returns?

To maintain fuel tax accountability, the ministry requires registrants to file monthly fuel tax returns. Fines and penalties may apply if returns and payments are not received by the due date, are incomplete or tax is not remitted in full.

Once you register with the Ministry of Finance, the ministry will forward a personalized return each month. You must complete this return, even if you did not have any activity during the reporting period.

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 Ministry of Finance, 33 King Street West, Oshawa or at ServiceOntario locations.

If you use ONT‑TAXS online, you can elect to stop receiving paper returns by clicking the 'Change in Issuing Returns' link.

Fuel retailers are not required to complete returns, however, they must keep, at their principal place of business, records and books of account for all gasoline purchases and sales for seven years.

Guides to help you complete your fuel tax returns and Schedules

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.

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 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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