Clearing up confusion on the federal carbon fuel tax
April 2, 2019 By Bruce Buttar Director Ontario Federation of Agriculture
A new federal fuel surcharge came into effect on April 1, 2019. Farmers in Ontario are eligible for an exemption on fuels used for farming practices, but the details have created some confusion among Ontario’s agriculture industry. The Ontario Federation of Agriculture (OFA) is working to clarify the details around how farmers can qualify for the exemption.
Three areas of the new fuel surcharge have created confusion – what fuels are exempt from the new fee, how farmers qualify for the exemption and where to go for more information?
The new surcharge will increase the price of fuel – that includes gasoline, light fuel oil (clear and coloured diesel), natural gas, propane and non-market natural gas. Fuel purchases that will be eligible for exemption must be delivered and stored on the farm. Fuel must be used exclusively on the farm in eligible farm machinery. That means anything used for farming including farm trucks, tractors, stationary or portable engines, etc. Cars, or equipment used to heat or cool a building do not quality for the exemption. Visit Canada Revenue Agency for a full listing of eligible machinery and vehicles.
To qualify for the exemption, farmers must complete a Fuel Charge Exemption Certificate for Farmers (Form L402) – a form available from the Canada Revenue Agency website. For more information on completing this form, OFA suggests that farmers talk to their fuel suppliers or call Service Canada.
Greenhouse operators are also eligible for a fuel surcharge exemption – an 80 per cent partial relief on propane or natural gas delivered to a commercial greenhouse by a registered distributor. Eligible fuel must be used exclusively for the operation of a greenhouse, including heating or producing carbon dioxide. Fuel Charge Exemption Certificate for Greenhouse Operators (Form L404) are also available from the Canada Revenue Agency website.
There has also been confusion about fuel sourced from cardlock facilities. At this time, farm fuel purchased from cardlock facilities is NOT eligible for exemption. The federal government is proposing to expand the fuel tax relief for gas and light fuel purchased through these facilities, but the details are still being worked out.
OFA recommends all farmers keep diligent records of all fuel purchases, whether or not they are eligible for the surcharge exemption. Keep detailed mileage logs on all vehicles too. These records will help you track any fuel used outside of farming activities – that is not eligible for the exemption. These records will also assist with farm tax filing and if the farm taxes are ever audited. The federal government has not made allowances for fuel purchased from retail stations, and it is not eligible for the farm fuel tax exemption.
If you have any questions about the new fuel surcharge, how to complete the eligible forms or confirm what fuel purchases may be exempt for your farm business, read OFA’s online resource, available at ofa.on.ca/resources, contact your OFA Member Service Representative (MSR), visit the Canada Revenue Agency website or talk to your local fuel provider.
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