Temporary Relief of the Fuel Charge – Light Fuel Oil for Use Exclusively in Eligible Heating Activities

Fuel Charge Notice FCN15

November 2023

The information in this publication is based on the Draft Regulations Amending the Fuel Charge Regulations published by the Department of Finance Canada on November 3, 2023. The information in this publication does not replace the law found in the Greenhouse Gas Pollution Pricing Act and its regulations.

If this information does not completely address your particular situation, you may refer to the Act or relevant regulation, or contact your CRA regional excise office for additional information. The offices are listed at Contact Information – Excise and Specialty Tax Directorate.

Any commentary in this publication should not be taken as a statement by the CRA that the Draft Regulations will be made in their current form.

Application of the fuel charge

The federal fuel charge applies on 21 types of fuel and combustible waste. For a list of the fuel types and combustible waste that are subject to the fuel charge and the applicable rates, go to Fuel Charge Rates.

The federal fuel charge applies to certain fuel-related business activities in Alberta, Manitoba, New Brunswick, Newfoundland and Labrador, Nova Scotia, Nunavut, Ontario, Prince Edward Island, Saskatchewan and Yukon. Provinces and territories where the fuel charge applies are known as listed provinces.

Table of Contents

• Overview
• Eligible heating activity
• Relief 
• Diversion from eligible heating activities
• Fuel held on an adjustment day
• Registration

Overview

On October 26, 2023, the Government announced a proposed temporary pause of the fuel charge on deliveries of light fuel oil for use exclusively in eligible heating activities. This proposed relief would apply to deliveries after November 8, 2023, and before April 1, 2027. 

Eligible heating activity

The proposed Draft Regulations Amending the Fuel Charge Regulations (Draft Regulations) define eligible heating activity to mean “the use of light fuel oil exclusively for providing heat to a home, building or similar structure but not for generating heat in an industrial process, including a commercial process that involves removing moisture from a good.”

The term exclusively would be interpreted as meaning solely or 100%.

Some examples of homes and buildings are apartments, condominiums, mobile homes, office buildings and warehouses.

Relief

Under proposed section 29 of the Draft Regulations, no fuel charge would be payable by a registered distributor of light fuel oil when it delivered fuel of that type in a listed province to a person and the following conditions applied:

• the light fuel oil was for use exclusively in eligible heating activities
• the person receiving delivery was not a registered distributor in respect of light fuel oil
• the light fuel oil was delivered after November 8, 2023, but before April 2027

Diversion from eligible heating activities

Proposed section 30 of the Draft Regulations would require that a person that took delivery of light fuel oil to be used in eligible heating activities from a registered distributor in a listed province would have to pay a fuel charge on that light fuel oil at a later time if either of the following applied:

1. the person used the light fuel oil in the listed province otherwise than in eligible heating activities
2. the person delivered the light fuel oil to another person unless the other person is the registered distributor and an exemption certificate applies in respect of the delivery

The person would have to use Form B401, Fuel Charge Return for Non-registrants, and related Form B401-1, Fuel Charge Return Schedule for Non-registrants, to report the fuel charge on a monthly basis where applicable. The return and related payment would have to be received by the end of the month following the month in which the light fuel oil was used otherwise than in eligible heating activities or delivered to another person.

Fuel held on an adjustment day

Under proposed section 31 of the Draft Regulations, a person that held light fuel oil in a listed province at the beginning of an adjustment day that is after November 8, 2023, up to and including April 1, 2027, would be required to report and pay a fuel charge in respect of the light fuel oil at the beginning of an adjustment day in each listed province using the following formula:

Every person that would be liable to pay a charge on fuel held at the beginning of an adjustment day would have to file Form B402, Fuel Charge Return for Fuel Held on Adjustment Day, as well as one Form B402-1, Fuel Charge Return Schedule for Fuel Held in a Listed Province on Adjustment Day, for each applicable listed province. The return and related payment would have to be received by the end of the following month.

For more information on reporting and paying the charge on fuel held at the beginning of an adjustment day, refer to Fuel Charge Notice FCN3, Annual Charge on Fuel Held in a Listed Province on Adjustment Day.

Registration

Under proposed section 32 of the Draft Regulations, for the purposes of paragraph 55(3)(c) of the Act, a person would be allowed to apply before April 2027 to be registered as a distributor of light fuel oil if the person carried on the business of selling, delivering or distributing light fuel oil and, in the ordinary course of that business, delivered in a listed province light fuel oil that is for use in eligible heating activities.

To apply for registration as a distributor, a person must complete Form L400, Fuel Charge Registration. The person must also complete Form L400-1, Fuel Charge Registration Schedule.

The person can submit these registration forms electronically using the “Submit documents” function in My Business Account. If the person submits their application for registration electronically, they will be provided with a confirmation number that they should keep to follow up on the status of the application.

The person can also send the completed registration forms by mail to the following address:

Sudbury Tax Centre
Fuel Charge Program
PO Box 20000 Station A
Sudbury ON  P3A 5C1

The processing of the fuel charge registration could be delayed in the case of missing or incomplete information.

If the application for registration is approved, the Canada Revenue Agency will inform the person in writing of their registration number and the effective date of registration.

Further information