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Frequently Asked Questions
Please note: Important changes were announced in the September Budget Update 2009. For information on these changes, please see the notice, September Budget Update 2009 – Tax Change Summary. The information below will be updated shortly to reflect the changes.
Questions:
General
Individuals
Businesses
Contact Information
Answers:
General
The carbon tax is a broad-based tax on fuels, such as gasoline, diesel, natural gas, heating fuel, propane and coal. It also applies to combustibles, such as tires and peat, when used to produce energy or heat. The carbon tax is based on the carbon dioxide equivalent emissions from each type of fuel and combustible.
What does carbon dioxide equivalent (CO2e) emissions mean? |
Fuels release the greenhouse gases carbon dioxide, methane and nitrous oxide. Methane and nitrous oxide have different warming effects on the atmosphere than carbon dioxide. The warming effect of these two gases can be expressed in amounts of carbon dioxide that has the same warming effect over a period of time. The tax rates, effective July 1, 2009, are based on $15 per tonne of carbon dioxide equivalent emissions from the combustion of each fuel. The tax rate will increase by $5 per tonne on July 1 of each year until July 1, 2012. The tax rates for 2013 and after have not yet been determined.
What is the government doing to make the carbon tax revenue neutral? |
Revenues from the carbon tax will be returned to taxpayers through reductions in other provincial taxes. For more information on revenue neutral initiatives, please see our website at www.fin.gov.bc.ca/scp/tp/climate/A2.htm
Effective July 1, 2008, fuels listed in the Carbon Tax Rates by Fuel Type schedule are generally subject to carbon tax if the fuel is:
- purchased in British Columbia,
- transferred, in British Columbia, into the supply tank of a commercial ship or aircraft, or a vehicle run on rails,
- brought into British Columbia in the supply tank of an aircraft or ship, or, in some cases, a motor vehicle, or
- used in British Columbia.
In addition, combustibles listed in the schedule are taxable if used to produce energy or heat. The schedule is available on our Carbon Tax website or see the answer to the question below, Who do I contact for more information? Examples of taxable uses of fuels and combustibles include:
- heating businesses or residences,
- running motor vehicles or other engines,
- operating machinery or equipment for manufacturing or industrial processes, and
- burning tires to produce energy or heat.
Industries, businesses and individuals who buy, bring in, transfer or use fuels, or burn combustibles in the province are required to pay the carbon tax.
What are the carbon tax rates? |
Please see the schedule, Carbon Tax Rates by Fuel Type, or a list of the fuels and combustibles that are subject to carbon tax and the carbon tax rate for each type of fuel. The schedule is available on our Carbon Tax website or see the answer to the question below, Who do I contact for more information?
How is the carbon tax different from the motor fuel tax (MFT)? |
Carbon tax is a broad based tax whereas MFT has a narrower tax base with more exemptions in place. In addition, carbon tax is based on the designated use of a fuel whereas MFT is a tax on how a fuel is actually used. For example, jet fuel is subject to carbon tax at 3.92 cents per litre regardless of how the fuel is used (rate effective July 1, 2009).
For MFT, the tax rate depends on where the fuel is purchased (e.g. transit area). However, carbon tax rates are the same throughout the province.
How is carbon tax calculated when MFT or provincial sales tax (PST) apply to the same fuel purchase? |
Carbon tax is in addition to the MFT or PST payable.
Calculate carbon tax on fuel subject to PST as follows:
- calculate PST as a percentage on the sale price of the fuel sold before the carbon tax is added, and
- calculate carbon tax separately on the volume of the fuel sold (e.g. for gasoline
3.51 cents per litre [rate effective July 1, 2009]).
Calculate carbon tax on fuel subject to MFT as follows:
- calculate both the carbon tax and MFT on the volume of the fuel sold, and
- calculate each tax separately.
Is fuel imported into British Columbia subject to carbon tax? |
Yes. Fuel brought into British Columbia for sale or taxable use in the province is subject to carbon tax as of July 1, 2008, unless the fuel:
- is brought into British Columbia in the supply tank of a non-commercial aircraft or ship and is used in the operation of the aircraft or ship, or
- is less than 182 litres and is brought into British Columbia in the supply tank, or supplemental supply tank, of a non-commercial motor vehicle.
Is fuel exported from British Columbia subject to carbon tax? |
Fuel that is sold in British Columbia is exempt from carbon tax if it is exported by the seller from British Columbia for use outside the province, or is sold to a purchaser who has, on or before the time of purchase, entered into a contract with a common carrier to remove the fuel from the province.
Is there carbon tax on biofuels, such as ethanol and biodiesel? |
No. Biofuels and renewable energy such as ethanol, biodiesel, biomass, pulping liquor, and wood are not subject to carbon tax.
Does carbon tax apply to Nisga’a citizens who participated in the treaty? |
Yes.
Some fuels, or some fuels in certain circumstances, are not subject to carbon tax. In these cases, either carbon tax will not be charged at the time of purchase, or, if charged, the carbon tax paid will be refundable. Examples include:
- biofuels and renewable energy, such as biodiesel, ethanol, biomass, pulping liquor and wood,
- fuel that is sold in British Columbia and exported by the seller from British Columbia for use outside the province,
- fuel that is sold to a purchaser, if the purchaser has entered into a contract with a common carrier to remove the fuel from the province at the time of sale,
- fuel sales, including exchanges and barters, between collectors who each own and operate a refinery in Canada,
- fuel used for inter-jurisdictional flights,
- fuel used for inter-jurisdictional marine travel or transportation,
- fuel sold to inter-jurisdictional cruise ships,
- fuel sold to ships not engaged in the coasting trade,
- fuel that is not combusted when used for the following purposes:
- as a raw material (feedstock) in an industrial process to produce or upgrade another fuel or to manufacture another substance,
- as a raw material to manufacture anodes that are to be used in an electrolytic process for smelting aluminium,
- as a reagent to separate out coal or ores of metal in an industrial floatation process,
- in pipeline pigging,
- in down-hole operations at a well site,
- to remove natural gas liquids or impurities in the processing of marketable natural gas,
- as a refrigerant in a closed system in the processing of marketable natural gas, and
- as a reductant in the production of lead or zinc (for more information, please see the notice Carbon Tax Refunds – Purchasers).
- fuel brought into British Columbia in the supply tank of a non-commercial aircraft or ship and used in the operation of the aircraft or ship,
- up to 182 litres of fuel brought into British Columbia in the supply tank, or supplemental supply tank, of non-commercial motor vehicles,
- fuel sold in small pre-packaged, sealed containers of four litres or less,
- fuel purchased on-reserve by First Nation purchasers who qualify as Indians or bands under section 87 of the Indian Act (Canada), and
- fuel purchased by visiting military forces and members of the diplomatic and consular corps.
Individuals
Are persons visiting British Columbia required to pay carbon tax? |
Yes. If you are visiting British Columbia, you are required to pay carbon tax on any taxable purchases of fuel in the province.
Are persons with disabilities who are registered for the Fuel Tax Refund Program under the Motor Fuel Tax Act eligible for a refund of carbon tax? |
No. There is no carbon tax refund program for persons with disabilities.
Businesses
Are farmers exempt from carbon tax on fuel purchased or used for farming operations? |
No. If you are a farmer, you are required to pay carbon tax on fuel purchased or used in your farming operations.
Are businesses that purchase carbon offsets or credits exempt from paying carbon tax? |
No. If you purchase carbon offsets or credits you are still required to pay carbon tax.
How is carbon tax collected for marketable natural gas and propane? |
The tax collection and remittance procedures for natural gas and propane are modelled after the collection procedures for the social service tax, also called the provincial sales tax. Carbon tax is payable by the end purchaser (consumer). Carbon tax is collected by the retail dealer and remitted directly to the ministry.
If you make retail sales of marketable natural gas or propane to end purchasers, you are required to apply for registration as a marketable natural gas or propane retail dealer under the Carbon Tax Act.
For more information, please see the Notice to Marketable Natural Gas and Propane Sellers - Carbon Tax on our Carbon Tax website or see the answer to the question below, Who do I contact for more information?
How is carbon tax collected for fuels other than marketable natural gas or propane? |
The tax collection and remittance procedures for the carbon tax are modelled after the collection procedures for the motor fuel tax.
If you make the first sale of fuel in British Columbia, other than marketable natural gas or propane, you are required to be appointed as a collector. As a collector, you must pay security to the government equal to the amount of tax that will be payable on the fuel at a retail sale. All other dealers acquire the fuel at a price that includes a similar amount. Carbon tax is payable by the end purchaser (consumer). For a detailed explanation of how security and carbon tax is collected, please see the notice, British Columbia Carbon Tax Update on our Carbon Tax website.
If you are uncertain whether you need to apply to be appointed as a collector, please see the Notice to Fuel Sellers – Carbon Tax on our Carbon Tax website or see below, Who do I contact for more information?
What is taxable for fuel producers or refiners in the oil and gas industry? |
If you are a producer or manufacturer of fuel in British Columbia, such as a business in the oil and gas industry, and you use your own fuel or import fuel for your use in the course of your operations, you are required to self-assess and pay carbon tax on that fuel.
Examples of taxable uses of fuel by the oil and gas industry include:
- fuel used to run compressors and pumps, or to generate heat,
- fuel used for the operation of equipment or machinery during manufacturing, refining, processing or transportation of oil and gas, and
- fuel that is flared or incinerated.
Examples of non-taxable uses of fuel by the oil and gas industry include:
- fuel used as a raw material in an industrial process to produce or upgrade another fuel,
- fuel used in pipeline pigging,
- fuel used in down-hole operations at a well site,
- fuel used to remove natural gas liquids or impurities in the processing of marketable natural gas, and
- fuel used as a refrigerant in a closed system in the processing of marketable natural gas.
The self-assessed tax is payable on the 28th day of the month following the reporting period in which you use the fuel in the province. Reporting periods are monthly, quarterly or annually, and are established by the ministry after you have filed your first tax return.
For more information, please see the notice, Self‑Assessing Carbon Tax, on our Carbon Tax website or see the answer to the question below, Who do I contact for more information?
What is taxable for producers of coal? |
If you are a producer or manufacturer of fuel in British Columbia, such as a business in the coal industry, and you use your own fuel or import fuel for use in the course of your operations, you are required to self assess and pay carbon tax on that fuel.
Examples of taxable uses of fuel by the coal industry include:
- fuel used to dry coal,
- fuel used for the operation of equipment or machinery used to create coke, and
- fuel used for the operation of equipment or machinery for the extraction, processing, production or transportation of coal.
Examples of non-taxable uses of fuel by the coal industry include:
- fuel used as a reagent to separate out coal or ores of metal in an industrial floatation process.
The self-assessed tax is payable on the 28th day of the month following the reporting period in which you use the fuel in the province. Reporting periods are monthly, quarterly or annually, and are established by the ministry after you have filed your first tax return.
For more information, please see the notice, Self‑Assessing Carbon Tax, on our Carbon Tax website or see the answer to the question below, Who do I contact for more information?
Who can qualify as a registered consumer? Can a registered consumer purchase fuel exempt from carbon tax? |
You may apply to the ministry for registration as a registered consumer if you own or operate:
- an inter-jurisdictional rail service,
- an inter-jurisdictional air service that does not offer flights connecting points in British Columbia, or
- a business that uses at least 50% of a type of fuel for certain exempt purposes (e.g. as a feedstock to manufacture another substance, such as plastics).
As a registered consumer, you may purchase a specified type of fuel without paying carbon tax at the time of purchase. You are required to self-assess and pay carbon tax for that specified type of fuel when you use the fuel for a taxable purpose in British Columbia.
Inter-jurisdictional air services that use all their fuel in a given reporting period for flights that do not connect two points in British Columbia are not required to file a Carbon Tax Return – Registered Consumers form (FIN 176) for that reporting period. All other registered consumers must file a Carbon Tax Return – Registered Consumers form (FIN 176) for each reporting period, even for periods in which no tax is payable.
If you are a registered consumer that is not an inter-jurisdictional air service, you are required to self assess and remit carbon tax to the ministry by the 15th day of the month following the reporting period in which you use the fuel in the province.
For more information, please see the notice, Registered Consumer – Carbon Tax, on our Carbon Tax website or see the answer to the question below, Who do I contact for more information?
If my business meets the qualifications to be a collector and a registered consumer under the Carbon Tax Act, do I need to apply for two certificates or can I just use my collector number to purchase fuel exempt as a registered consumer? |
No. You cannot use your collector number. You need to apply for both a collector permit and a registered consumer certificate.
Who can qualify as a registered air service? Can a registered air service purchase fuel exempt from carbon tax? |
You may apply to the ministry for registration as a registered air service if:
- you own or operate a commercial air service that offers air transportation of passengers, goods, or both, to members of the public for a fee on a scheduled or chartered basis,
- at least 50% of the fuel that you use in all flights beginning or ending in British Columbia is for flights that do not connect two locations in the province,
- you hold a licence issued by the Canadian Transportation Agency and an operating certificate issued by Transport Canada for each aircraft and flight that is part of your commercial air service, and
- all flights that you offer are authorized by the Canadian Transportation Agency and Transport Canada.
As a registered air service, you may purchase the type(s) of fuel indicated on your registration certificate without paying carbon tax at the time of purchase. You are required to self assess and pay carbon tax on the 15th day of the month following the reporting period during which you use the type(s) of fuel indicated on your registration certificate on flights that connect points within British Columbia. This includes fuel that you:
- purchase in British Columbia,
- bring into British Columbia in the supply tank, or supplemental supply tank, of an aircraft, or
- transfer, in British Columbia, into the supply tank, or supplemental supply tank, of an aircraft.
You are also required to self-assess and remit carbon tax on the amount of fuel you determine will not be used, for example, due to spillage.
For more information, please see the notice, Registered Air Service and Registered Marine Service – Carbon Tax, on our Carbon Tax website or see the answer to the question below, Who do I contact for more information?
Who can qualify as a registered marine service? Can a registered marine service purchase fuel exempt from carbon tax? |
You may apply to the ministry for registration as a registered marine service if:
- you own or operate a commercial marine service that offers marine transportation of passengers, goods, or both, to members of the public for a fee on a scheduled or chartered basis, and
- at least 50% of all the trips of all of your ships that begin or end in British Columbia
are trips that do not involve carrying passengers or goods loaded at one location in British Columbia to the same or another location in the province for unloading,
or
- you own or operate a commercial marine service that does not offer marine transportation of passengers, goods, or both, and
- at least 50% of all the trips of all your ships that begin or end in British Columbia
also include a stop at a port outside of British Columbia.
As a registered marine service, you may purchase the type(s) of fuel indicated on your registration certificate without paying carbon tax at the time of purchase. You are required to self assess and pay carbon tax on the 15th day of the month following the reporting period during which you use the type(s) of fuel indicated on your registration certificate on a trip, or a portion of a trip, that is not exempt. This includes fuel that you:
- purchase in British Columbia,
- bring into British Columbia in the supply tank, or supplemental supply tank, of a vessel, or
- transfer, in British Columbia, into the supply tank, or supplemental supply tank, of a vessel.
You are also required to self‑assess and remit carbon tax on the amount of fuel you determine will not be used, for example, due to spillage.
For more information, please see the notice, Registered Air Service and Registered Marine Service – Carbon Tax,on our Carbon Tax website or see the answer to the question below, Who do I contact for more information?
Is fuel exempt from carbon tax when used in ships under any other circumstances? |
Fuel used in cruise ships on cruises that have scheduled ports of call outside of British Columbia, or in ships that cannot, and do not, engage in coasting trade under the Coasting Trade Act (Canada), is exempt from carbon tax. In addition, visiting military forces are exempt from paying carbon tax.
Do propane retail sellers who sell large pre-filled tanks of propane (e.g. 20 lbs/18 litres) need to register as retail dealers under the Carbon Tax Act? |
Yes. If you are a retail seller of propane, you need to apply to be registered as a marketable natural gas or propane retail dealer. You are required to collect and remit carbon tax on any propane that you sell as of July 1, 2008.
Please note : Propane sold in small, sealed, pre-packaged containers of
four litres (4.48 lbs) or less is exempt from carbon tax.
Do businesses that self-assess carbon tax need to be registered under the Carbon Tax Act? |
There is no requirement for you to register to self assess carbon tax, however you are required to file a Carbon Tax Return – Self Assessors form (FIN 112) and pay carbon tax on the fuel you use in your business operations.
You are also required to self assess and pay carbon tax on peat or tires combusted for your business use in the province.
For more information, please see the notice, Self‑Assessing Carbon Tax, on our Carbon Tax website or see the answer to the question below, Who do I contact for more information?
When do collectors need to pay security to the ministry? |
If you are a collector, you are required to pay security to the ministry on the 15th day of the month following the reporting period in which the fuel is first sold in British Columbia.
Reporting periods are monthly, quarterly or annually, and are established by the ministry when you are appointed as a collector. Your reporting period will be based on the annual amount of carbon tax or security you are required to pay or remit.
For more information, please see the Notice to Fuel Sellers – Carbon Tax on our Carbon Tax website or see the answer to the question below, Who do I contact for more information?
Is there an allowance for collectors for paying security to the government? |
No. An allowance is not available for collectors paying security to the government. Deputy collectors (wholesale dealers) and retail dealers who are required to calculate and report their inventory when the tax rates change are entitled to an allowance of $250 each time they are required to calculate and report their inventory.
For more information, please see the Notice to Deputy Collectors and Retail Dealers – Fuel Inventory on our Carbon Tax website or see the answer to the question below, Who do I contact for more information?
Are marketable natural gas or propane suppliers who only sell marketable natural gas or propane for resale required to pay security to the ministry? |
No. If you are a wholesaler of marketable natural gas or propane, you are not required to pay security. Retail dealers collect carbon tax at the time of retail sale to end purchasers, and remit the carbon tax directly to the ministry.
I am a retailer and I paid security to my supplier. How do I get security back if I sell the fuel to an exempt purchaser? |
You may apply for a refund of security if you sell the fuel to someone who is exempt from carbon tax at the time of purchase, such as a Status Indian or registered consumer. Information on how to claim a refund is available on our Carbon Tax website or see the answer to the question below, Who do I contact for more information?
When do marketable natural gas and propane retailers need to remit carbon tax to the ministry? |
If you are a marketable natural gas or propane retailer, you are required to remit carbon tax to the ministry on the 15th day of the month following the reporting period in which you sell the fuel to an end purchaser.
Reporting periods are monthly, quarterly or annually, and are established by the ministry when you are registered as a marketable natural gas or propane retail dealer. Your reporting period will be based on the annual amount of carbon tax you are required to remit.
For more information, please see the Notice to Marketable Natural Gas and Propane Sellers – Carbon Tax on our Carbon Tax website or see the answer to the question below, Who do I contact for more information?
How should I calculate the tax on blends of taxable and non taxable fuels? |
You are only required to collect carbon tax on the taxable portion of a fuel blend. For example, biofuels, such as biodiesel, ethanol, biomass and wood, are not subject to carbon tax. This means, when selling B10, which consists of 10% pure biodiesel and 90% taxable diesel, you only charge and collect carbon tax on the diesel portion of the blend.
What happens if I accidentally charge carbon tax at the wrong rate? |
If you overcharge the tax, the person who paid the incorrect tax rate can apply for a refund. If you undercharge the tax, you are liable to pay the tax or security, or to remit the tax to the ministry.
What are the different conversion factors for propane? |
- 1 litre = 0.02559 gigajoules (GJ)
- 1 litre = 1.12 pounds
- 1 pound = 0.8929 litres
- 1 cubic meter (m3) of liquid propane = 1,000 litres
- 1 gigajoule (GJ) = 39.071657 litres
Contact Information
Who do I contact for more information? |
If you have any questions about carbon tax or your potential obligations under the legislation, please call us at 604 660-4524 in Vancouver or toll-free at 1 877 388-4440, or e-mail your questions to CTBTaxQuestions@gov.bc.ca
Information is being added to our Carbon Tax website as it becomes available: www.sbr.gov.bc.ca/business/Consumer_Taxes/Carbon_Tax/carbon_tax.htm
For a broad overview of the government’s climate action initiatives, see LiveSmart BC Website at www.livesmartbc.ca/government/index.html
Last Revised: September 2009 |
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