Fuel Tax

The 2014 Ontario Budget tabled on July 14 included a number of proposed tax and benefit related changes. Learn more.


As announced in the 2013 Ontario Budget, the fuel tax exemption for biodiesel is repealed effective April 1, 2014, making biodiesel taxed in the same way as diesel fuel.

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

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 HST, 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

When you buy gasoline, aviation fuel or propane, you do not pay fuel tax. Instead, you pay gasoline tax.

Read on: gasoline tax

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 to aid in the enforcement of fuel tax law. The dye is supplied by the Minister of Finance and added to fuel by registered dyers.

Data: historical dye costs

You do not have to pay fuel tax on coloured (red) fuel when the fuel is used for:

  • 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 as long as the fuel is acquired on a reserve.

Coloured fuel cannot be used in a licensed motor vehicle or in unlicensed recreation equipment, even if the motor vehicle is used in farming, construction, forestry, or mining.

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.

Read on: Coloured fuel

Registration

You need to register with the province if you are a

  • collector
  • importer
  • exporter
  • operator of commercial vehicles travelling into or out of Ontario licensed under IFTA
  • interjurisdictional transporter of fuel into or out of Ontario licensed under IFTA
  • manufacturer
  • fuel dyer

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

If you operate a commercial motor vehicle travelling into or out of Ontario, you must display on your vehicle IFTA registration decals issued by your base state or province.

If the vehicle is not registered under the IFTA then you must get a one-time permit from your state/province for each trip and keep it in your vehicle.

Read on: International Fuel Tax Agreement

Filing a fuel tax return

Each month the Ministry of Finance will mail you a personalized return that you need 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

Completed fuel tax returns are to be sent to the ministry by the 25th day of the month following the last day of your reporting period.

Registered manufacturers need to send their completed return by the 25th day of the second month following the month to which the return relates. 

How to complete your fuel tax return

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