Frequently Asked Questions

Questions:

General

Individuals

Businesses

Questions Related to Carbon Tax Only

Questions Related to Motor Fuel Tax Only

Overdue Payment Questions

Common Errors Taxpayers Make in Submitting Tax Returns and Payments

Answers:

General

Current motor fuel tax and carbon tax rates are set out in Bulletin MFT-CT 005, Tax Rates on Fuels. The carbon tax rates are also set out in the schedules Carbon Tax Rates by Fuel Type – to December 31, 2009 and Carbon Tax Rates by Fuel Type – From January 1, 2010.

For fuels sold for use, or used, in internal combustion engines (i.e. motor fuels), the motor fuel tax and carbon tax are calculated on the volume of fuel. The HST is calculated as a percentage of the sale price (i.e. the product price plus the motor fuel tax and/or carbon tax).

The HST rate is 12%; however, there is a point-of-sale rebate for the 7% provincial portion of the HST for most fuel types. The only fuels not eligible for the point-of-sale rebate are marine bunker fuel, M85+, natural gas and propane. These fuels, except for natural gas used in certain stationary engines, including compressors, are exempt from motor fuel tax.

For more information on the point-of-sale rebates for the 7% provincial portion of the HST, please see HST Notice #2, Point-of-Sale Rebates for British Columbia HST.

Example

For fuels sold for use other than in an internal combustion engine (i.e. non-motor fuels), motor fuel tax does not apply. Carbon tax is calculated on the volume of the fuel, and HST is calculated as a percentage of the sale price of the fuel (i.e. the product price plus the carbon tax). If a non-motor fuel is sold, the point-of-sale rebate for the 7% provincial portion of the HST does not apply unless the fuel is purchased for residential energy use. For more information on the residential energy credit and rebate, please see HST Notice #10, Residential Energy Credit and Rebate Program Notice to Consumers.

For a complete list of the fuels and combustibles subject to motor fuel tax and carbon tax, and their tax rates, please see Bulletin MFT-CT 005, Tax Rates on Fuels.

Yes. Effective January 1, 2010, motor fuel tax and carbon tax apply to ethanol at the same rate as gasoline, and to biodiesel and renewable diesel at the same rate as diesel or light fuel oil. However, other non petroleum based fuels, such as pulping liquor and wood, are not subject to carbon tax.

Effective July 1, 2010, propane is exempt from tax, and is not subject to the payment of security, under the Motor Fuel Tax Act. However, propane is taxable under the Carbon Tax Act and is subject to the payment of security when purchased for resale. For more information, please see Notice 2010-004, Notice to Propane Sellers – Carbon Tax.

If you have any questions about motor fuel tax or carbon tax, or your potential obligations under the legislation, please call us toll-free at 1 877 388-4440, e-mail your questions to CTBTaxQuestions@gov.bc.ca, or visit our Motor Fuel Tax and Carbon Tax website at www.sbr.gov.bc.ca/business/Consumer_Taxes/MotorFuelTax_CarbonTax/ mft_ct.htm

Individuals

Yes. If you are visiting British Columbia, you are required to pay motor fuel tax and carbon tax on any taxable purchases of fuel in the province.

No. There is no carbon tax refund program for persons with disabilities.

Yes. You must pay motor fuel tax and carbon tax on fuel that you bring into British Columbia for your own use in a tidy tank or similar container, whether you are a commercial or non-commercial user. To pay motor fuel tax, use the Miscellaneous Payment of Tax form (FIN 135). To pay carbon tax, use the Carbon Tax Return – Self-Assessors form (FIN 112).

Farmers cannot purchase fuel exempt from carbon tax. However, persons who qualify as farmers may purchase coloured fuel exempt from motor fuel tax in certain situations. For more information on the coloured fuel exemption for farmers, please see Bulletin MFT-CT 003, Coloured Fuels.

Businesses

You may apply for a refund of the security you paid if you sell the fuel to someone who is exempt from motor fuel tax and/or carbon tax at the time of purchase, such as a registered consumer or a status Indian.

For more information, please see Bulletin MFT-CT 007, Refunds for Deputy Collectors and Retail Dealers, and Bulletin MFT-CT 002, Sales to Status Indians and Indian Bands, and the Exempt Fuel Retailer Program.

If you sell fuel to an end purchaser and you:

• overcharge the motor fuel tax and/or carbon tax, you may reverse the sale and re-bill your customer if you have not yet remitted the additional tax collected to the ministry. If you have already remitted the additional tax collected to the ministry, your customer may apply to the ministry for a refund.
• undercharge the motor fuel tax and/or carbon tax, you are still required to pay:
  • if you are a collector for that fuel, the correct amount of security or tax to the ministry, or
  • if you are a deputy collector or retail dealer for that fuel, other than natural gas, the correct amount of security to your fuel supplier, or
  • if you are a retail dealer for natural gas, the correct amount of tax to the ministry.

If you sell fuel to a deputy collector or retail dealer and you:

• overcharge the motor fuel tax or carbon tax, you should reverse the sale and re-bill the deputy collector or retail dealer. If you do not reverse the sale and re-bill the deputy collector or retail dealer, you are required to pay the additional tax collected to the ministry.
• undercharge the motor fuel tax or carbon tax, you are still required to pay:
  • if you are a collector for that fuel, the correct amount of security to the ministry, or
  • the correct amount of security to your fuel supplier.

  In these cases, you may re-bill the deputy collector or retail dealer to collect the correct amount of tax.

It depends. If you rent or lease equipment with fuel to your customer for a single price (e.g. a fixed daily rate), you are considered to be the end purchaser (consumer) of the fuel. This means that you are required to pay motor fuel tax and carbon tax to your supplier, and you do not collect motor fuel tax or carbon tax from your customer.

If your customer returns the equipment with less fuel than you originally provided, and you charge your customer a fee for that fuel, motor fuel tax and carbon tax apply in the same way as described above. You pay motor fuel tax and carbon tax to your supplier. You do not collect motor fuel tax or carbon tax from your customer because the fee you charge is considered to be a penalty for returning the equipment with less fuel, rather than a sale of fuel.

If you rent or lease equipment with fuel to your customer and you separately itemize the fuel, other than natural gas, on your customer's invoice, your customer is considered to be the end purchaser (consumer) of the fuel and you are the retail dealer. You are required to collect motor fuel tax and carbon tax from your customer to reimburse yourself for the security you paid when you purchased the fuel from your supplier.

For more information, please see Bulletin MFT-CT 001, Fuel Sellers.

If you separately itemize natural gas when you rent or lease equipment, you are required to apply to the ministry to be appointed as a natural gas retail dealer. You collect carbon tax from your customers and remit the carbon tax to the ministry.

For more information, please see Notice 2008-020, Notice to Natural Gas and Propane Sellers – Carbon Tax.

If you use the fuel or combustibles that you manufactured in, or imported into, British Columbia for your own business operations, you are required to self-assess and pay motor fuel tax and/or carbon tax on that fuel or combustible.

The self-assessed motor fuel tax is payable on the 15th day, and the self-assessed carbon 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 Bulletin MFT-CT 006, Self-Assessing Motor Fuel and Carbon Tax.

Please contact us by mail or e-mail at:

Motor Fuel and Carbon Tax Section
Consumer Taxation Programs Branch
Ministry of Finance
PO Box 9442 Stn Prov Govt
Victoria, BC V8W 9V4
CarbonTax@gov.bc.ca or FuelTax@gov.bc.ca

A vendor is a person who sells fuel for the first time after its manufacture in, or import into, British Columbia. If you are a vendor and you are not appointed as a collector, you must not sell fuel within British Columbia for the first time after it is manufactured in, or imported into, British Columbia. If you do so, you will be charged a penalty equal to the amount of security that you should have paid if you had been a collector. If you continue to wilfully sell fuel without an appointment, the ministry may charge you an additional penalty equal to the amount of security that you should have paid as if none of your sales were made exempt of tax or security under the Motor Fuel Tax Act and/or Carbon Tax Act. Also, you may be liable to a fine of up to $10,000 and/or imprisonment for up to two years.

Questions Related to Carbon Tax Only

Fuels listed in the carbon tax rate schedules are generally subject to carbon tax if the fuel is:

• purchased in British Columbia,
• transferred in British Columbia, into the supply tank of an aircraft or ship, or a vehicle run on rails,
• brought into British Columbia in the supply tank, or supplemental supply tank, of an aircraft or ship,
• brought into British Columbia for own use in a tidy tank or similar container (whether for commercial or non-commercial use),
• in excess of 182 litres and brought into British Columbia in the supply tank, or supplemental supply tank, of a motor vehicle other than an IFTA commercial vehicle, or
• used in British Columbia.

In addition, combustibles listed in the schedules are taxable if used to produce energy or heat.

Examples of taxable uses of fuels and combustibles include:

• heating businesses or residences,
• running motor vehicles or other engines,
• operating machinery or equipment,
• flaring, and
• burning tires to produce energy or heat.

Some non-petroleum based fuels, such as pulping liquor, wood, methanol produced from biomass and, in most circumstances, methane produced from biomass (biomethane) are not subject to carbon tax. However, when biomethane is blended with fuel and the proportion of biomethane and fuel cannot be determined, the blend is subject to carbon tax.

In certain circumstances, fuels are exempt from carbon tax depending on how they are sold or used. In these cases, either carbon tax will not be charged at the time of purchase, or, if charged, you may apply for a refund of the carbon tax paid. Examples include:

• fuel that is sold in British Columbia and exported by the seller from British Columbia for an end purchaser's (consumer's) own use outside the province,
• fuel that is sold to an end purchaser for their own use outside British Columbia, if the end purchaser, at the time of sale, has entered into a contract with a common carrier to export the fuel from the province,
• fuel sales, including exchanges and barters, by one refiner collector to another refiner collector, if both are appointed refiner collectors for the same type or subcategory of fuel,
• fuel used in inter-jurisdictional cruise ships,
• fuel used in ships prohibited from, and not engaged in, the coasting trade,
• fuel sold in sealed, pre-packaged containers of four litres or less,
• fuel purchased on reserve by status Indian end purchasers (consumers) who qualify as Indians or bands under section 87 of the Indian Act (Canada) (for more information, please see Bulletin MFT-CT 002, Sales to Status Indians and Indians Bands, and the Exempt Fuel Retailer Program),
• fuel purchased by visiting forces and members of the diplomatic and consular corps,
• fuel brought into British Columbia in the supply tank, or supplemental supply tank, of a non-commercial aircraft or ship and used in the operation of the aircraft or ship, and
• fuel up to, and including, 182 litres brought into British Columbia in the supply tank, or supplemental supply tank, of a motor vehicle other than an IFTA commercial vehicle or a locomotive, and used in the operation of that vehicle.

In certain circumstances, fuels are exempt from carbon tax if they are not combusted. If you are registered as a registered consumer, you are not required to pay carbon tax when you purchase the types of fuel specified on your registered consumer certificate. If you are not registered as a registered consumer, you are required to pay carbon tax when you purchase the fuel and subsequently you may apply for a refund of the carbon tax paid on fuel used for the following purposes:

• as a raw material (feedstock) in an industrial process to produce or upgrade another fuel or to manufactor another substance,
• as a raw material to manufacture anodes that are to be used in an electrolytic process for smelting aluminum,
• 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 natural gas,
• as a refrigerant in a closed system in the processing of natural gas,
• as an anti-freeze in a natural gas pipeline (effective September 2, 2009), and
• as a reductant in the production of lead or zinc (for more information, please see Bulletin CT 002, Carbon Tax Refunds for Purchasers).

In certain circumstances, fuels are either exempt from carbon tax or qualify for a refund of carbon tax, if they are used for inter-jurisdictional flights or interjurisdictional marine transportation. If you are registered as a registered consumer, a registered air service or a registered marine service, you are not required to pay carbon tax when you purchase the types of fuel specified on your registered consumer, registered air service or registered marine service certificate. If you are not registered as a registered consumer, a registered air service or a registered marine service, you are required to pay carbon tax when you purchase the fuel and subsequently you may apply for a refund of the carbon tax paid on fuel used for inter-jurisdictional flights or interjurisdictional marine transportation.

Please note: In all cases, the seller is rquired to have documentation to show why carbon tax was not collected. Documentation may include copies of certificates of exemption, registered consumer certificates, and registered air or marine service certificates.

No. If you purchase carbon offsets or credits, you are still required to pay carbon tax.

For information on carbon credits, please see the Pacific Carbon Trust website at www.pacifccarbontrust.com/

The only fuel sellers required to regularly remit carbon tax to the ministry are natural gas retail dealers and collectors.

If you are a natural gas retail dealer, 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 natural gas to an end purchaser (consumer).

If you are a collector, you are required to remit security equal to the carbon tax to the ministry on the 15th day of the month following the reporting period in which you sell the fuel to your customers.

Reporting periods are monthly, quarterly or annually, and are established by the ministry when you are registered as a natural gas retail dealer or appointed as a collector. Your reporting period will be based on the annual amount of tax or security you are required to remit

• 1 liquid litre = 0.02559 gigajoules (GJ)
• 1 liquid litre = 1.12 liquid pounds
• 1 pound = 0.8929 litres
• 1 cubic metre (m3) liquid propane = 1,000 litres
• 1 gigajoule (GJ) = 39.071657 litres of liquid propane

No. You cannot use your collector appointment number to purchase fuel exempt for your own use as a registered consumer. You need to apply for a registered consumer certificate (FIN 164).

Industrial oil is a subcategory of light fuel oil that is used as feedstock or for other non-energy purposes. A fuel is considered a feedstock when it is used as a raw material in an industrial process, is used to produce or upgrade another fuel, or is used to manufacture another substance without the feedstock being combusted. Industrial oil is subject to carbon tax.

No. You are considered to be selling heavy fuel oil and must charge carbon tax at the rate applicable for heavy fuel oil. Only light fuel oil can be sold as industrial oil.

Effective January 1, 2010, gas liquids were added as a new fuel type under the Carbon Tax Act. Gas liquids can be processed from natural gas or crude oil. Gas liquids are a mixture of two or more of the following components or substances: ethane, butane, propane and pentanes plus. To be considered gas liquids, the fuel must not have been processed or separated into ethane, butane, propane or pentanes plus, and must not be re-mixed. For example, butane and propane re-mixed together is not considered gas liquids, but rather a blend of butane and propane.

Effective January 1, 2010, gas liquids became subject to the payment of tax or security under the Carbon Tax Act, when purchased for use or resale.

Effective January 1, 2010, pentanes plus was added as a new fuel type under the Carbon Tax Act. Pentanes plus can be processed from both natural gas and crude oil. Pentanes plus is a component, like ethane, butane or propane, when it has been extracted from natural gas or gas liquids. Pentanes plus can be pentane alone, heavier hydrocarbons, or pentane in combination with one or more heavier hydrocarbons.

Effective January 1, 2010, pentanes plus became subject to the payment of tax or security under the Carbon Tax Act, when purchased for use or resale.

Questions Related to Motor Fuel Tax Only

No. Coloured Fuel is not authorized for use in any aircraft. For information on authorized uses of coloured fuel, please see Bulletin MFT-CT 003, Coloured Fuel.

You may purchase coloured fuel for your on-highway farm truck if it is licensed as a farm vehicle under the Commercial Transport Act (i.e. it is a vehicle with a farm licence plate, also known as an A or G plate), and it is being used by yourself or another person in the operation of your farm.

Yes. You may use coloured fuel in stationary or portable engines, including generators and chainsaws.

Overdue Payment Questions

If you received a collection notice, our office has not received your tax payment for:

• an audit assessment, or
• taxes not remitted under the Motor Fuel Tax Act or Carbon Tax Act.

If you have any questions, please call the phone number indicated on the notice or contact us.

Please call the phone number indicated on your collection notice. You may also call 1 800 663-7867 for general information.

If your collection notice or Notice of Assessment does not include a dollar amount, please call the phone number indicated on the notice or contact us.

You should obtain proof of payment (such as the front and back of a cancelled cheque or a letter indicating the account and amount paid) and then contact the phone number indicated on your collection notice. We may have processed your payment after the notice was sent out.

Please call the phone number indicated on your collection notice. If you are still not satisfied, you have the right to appeal to the minister under the legislation.

For more information, please see Bulletin GEN 003, Appeals of Tax Assessments or Disallowed Refunds, or Other Determinations.

We may have received your nil return after the notice was sent out. Please call the phone number indicated on the notice if you have further questions.

No, we do not currently accept credit card payments. The payment options are cheque, money order and electronic fund transfer (EFT).

There are a number of payment arrangements available to you. For details, please call the phone number indicated on the collection notice or contact us.

The province may initiate any of the following actions:

• suspend or cancel appointments or registrations issued to you under the Motor Fuel Tax Act and/or the Carbon Tax Act,
• place a notice of Crown Debt on your property,
• issue a demand on your wages, bank account or other accounts,
• set off funds owed to you by the provincial or federal government,
• file a Certificate of Judgement in the British Columbia Supreme Court,
• seize and sell your assets, and
• hold board members personally responsible for a corporation's debt under the Motor Fuel Tax Act and/or Carbon Tax Act.

If you owe a debt to the Province of British Columbia, the province can offset monies owing to you from the Canada Revenue Agency.

Common Errors Taxpayers Make in Submitting Tax Returns and Payments

There are a number of common errors taxpayers make in submitting tax returns and payments under the Motor Fuel Tax Act and/or Carbon Tax Act. The following is intended to help you avoid these errors.

• Use the correct tax return for the correct tax rate for the reporting period (e.g. January 1, 2010 to June 30, 2010, or July 1, 2010 to June 30, 2011).
• Sign the certification portion of the tax return.
• Do not write in shaded areas of the tax return.
• Do not send in a payment without also sending in a completed tax return.
• Do not re-use a media number as it is unique for each reporting period for carbon tax returns.
• If you have been assigned a filing frequency, send in a tax return even if you have no taxable activity or payment due.
• Send in your tax return and payment on time.
  • If you send in your tax return and payment by mail, it is considered on time if the envelope is postmarked by Canada Post (or a national equivalent if outside of Canada) on or before the due date. A business postage meter mark in not sufficient. If you mail your tax return and payment on or near the due date, request Canada Post to postmark the envelope immediately.
  • If you deliver your tax return and payment by hand or courier, it is considered on time if the envelope is received by the ministry by the close of business (4:30 pm) on the due date.
• When submitting an IFTA return, convert U.S. distances and fuel purchases to kilometres and litres, respectively (i.e. do not report in miles and gallons).
• When filing a carbon tax inventory return, do not take an inventory allowance on each type of fuel. You can claim only one $250 inventory allowance regardless of the number of fuel types you are reporting on the inventory return.
• Do not make changes to a current tax return to correct previous reporting errors (submit an amended tax return for that reporting period instead).
• Inform the ministry of a change in the name or ownership of a business, and do not continue to report under the previous entity's account number.
• If in doubt, visit the Motor Fuel Tax and Carbon Tax website at www.sbr.gov.bc.ca /business/Consumer_Taxes/ MotorFuelTax_CarbonTax /mft_ct.htm or contact the ministry at 1 877 388-4440.

Last Revised: July 2011