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CRA Fuel Charge - What Trucking Companies Need To Know?

October 28, 2023

Since April 2019, Canada’s government implemented a carbon tax on fuel which affects transportation companies across the country.

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The CRA Fuel Charge has the largest impact on trucking companies, which burn through a lot of gas transporting goods across the country. You’ve probably seen an increase in costs when going from one province/territory and fuel station to another because CRA applies if you operate tractor-trailers carrying goods across provincial borders or over international lines.

The CRA fuel charge also applies if you are using natural gas rather than diesel or petrol, but it can still be relevant based on the type of vehicle that uses gas.

Whether you are just learning about the CRA fuel charge, or you need a reminder on some of the details around registration/tax filings, this guide covers the basics trucking companies need to know.

What is the CRA Fuel Charge?

The fuel charge is technically called a Carbon Tax, and the CRA stands for "Carbon Reduction Act", commonly confused with the Canadian Revenue Agency. It was created to reduce CO² emissions by imposing a fee on carbon-based fuels such as natural gas, gasoline and diesel, and is typically charged at the point of purchase. This new legislation has been proposed to combat climate change by making energy more expensive, and thus less desirable for consumers and especially for trucking companies. In order to comply with the CRA, you or your drivers must pay this fee when purchasing fuel from gas stations in Canada.

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Fuel Charge Rates

The carbon pollution cost was $20 per tonne of carbon dioxide equivalent (CO2e) in 2019, however, this has risen approximately $10 a year, to an expected $50/tonne in 2022.

Rates for gasoline and light petroleum oil consider the average renewable content of the fuels in particular. Rates are based on the potential impact on global warming and the emission factors used by Environment and Climate Change Canada to disclose its greenhouse emissions to the United Nations Cadre Convention. The rates were introduced based on the average volume of renewable oil and gasoline fuels used.

Carbon Tax Rates on Diesel Consumed by Trucks:

According to Canadian Trucking Alliance, as of April 2019 the rates are as follows:

  • BC:10.23 ¢/litre
  • AB: 8.03 ¢/litre
  • SK: 5.37 ¢/litre
  • MB: 5.37 ¢/litre
  • ON: 5.37 ¢/litre
  • QC: 6.26 ¢/litre
  • NFL: 5.37 ¢/litre
  • NB: 5.37 ¢/litre  
  • NS: 1.2 ¢/litre
  • PEI: 5.37 ¢/litre

Dollar Impact On The Trucking Industry?

Given the nature of our industry, the CRA fuel charge has the largest impact on the operational cost of trucks due to the fuel consumption volume required to transport goods across the country.

Data collected by the Kent Group Ltd. shows that between 2015 and 2018, the rack (wholesale/before taxes) price of a litre of diesel fuel increased by 12.9 ¢/litre; currently in January 2019 Canadian average is 74.4¢ per litre which means if we project a 13% increase over this next 5 years, it will amount to an approximate 35% increase in prices for consumers at gas stations across Canada as well!

Fuel Charge
Data Source: Canadian Trucking Alliance

Given the current economic situation, trucking companies are running on incredibly thin margins; any increase in fuel prices would be detrimental to a company's bottom line. However on the bright side, this should be partially offset with technological advances becoming more prevalent within freight transportation networks across Canada - like Electronic Logging Device (ELD) equipped trucks - by increasing productivity and efficiency, ultimately saving operational costs. As noted by the Canadian Trucking Alliance,  “Ultimately, efficient freight transportation improves competitiveness and results in more goods being available at lower prices for consumers."

British Columbia IFTA How-to Guide

Alberta IFTA How-to Guide

Ontario IFTA How-to Guide

Who has to register for Fuel Charge?

As long as you or your drivers operate commercial vehicles that use diesel or petrol as fuel -  including delivery trucks and service vans, you’ll need to register for the Fuel Charge program.

Below are a few common examples in our trucking industry:

  • You have trucks that transport fuel from one province to another (to comply with CRA, your trucking company must pay a fee when they purchase fuel from filling stations in Canada)
  • You have technicians who need to visit customer sites throughout the day using the company's fleet of delivery trucks and/or service vans
  • You operate tractor-trailers carrying goods across provincial borders or over international lines.

The full list of applicable industries is listed as follows:

Distributor | Importer | Emitter | User of Fuel | User of Combustible Waste | Air Carrier | Specified Air Carrier | Marine Carrier | Specified Marine Carrier | Rail Carrier | Specified Rail Carrier | Road Carrier

If you are an eligible new business, and registration is mandatory for your industry, be sure to register immediately. For voluntary registrations, there’s no deadline so don't need to be worried! And if you fail to do so by the due deadline which can vary depending on what type of business categories are you in - then you will be at risk of a $2,000 penalty.

So who’s exempt?

The CRA Fuel Charge does not apply if you are using natural gas - or if you only operate in Saskatchewan.

How To File Fuel Charge Returns?

Step 1: Registration

First, you need to register your business with CRA. You can do this by filling out the L400 form and submitting it online in your CRA Business Account or sending it by postal mail.

Even if your business is already enrolled in this program with a specific category, the trucking portion of your business still needs a separate form to help identify the road carrier branch/division. This can be done with the form L400-2.

If you find that your business matches two criteria for registration, then you should register under one category only unless you file rerun separately.

Step 2: Filing the return

The next step for your registered business is to submit the return. To submit the Fuel Charge Return, download Form B400. On the form, top section to provide information regarding your business information. This will include:

  • A business number
  • Physical address
  • The type of return
  • Submission period.

The second part of this return provides information about the fuel consumption detail and charge for each province, including any applicable rebates.

An ELD device makes the job easier if you have all information recorded accordingly in your ELD device - such as Switchboard, which automates Fuel Charge reporting.

Step 3: Authorization

As an authorized person, you must enter your name (print) and title, sign and date the return, and provide a current telephone number so that the CRA can contact you about this return.

As a truck operator, you must submit the completed form and applicable schedule(s) to the Canada Revenue Agency (CRA) by the end of the calendar month that follows the reporting period.

What provinces have a carbon tax in Canada?

All provinces in Canada, except for Saskatchewan, have a carbon tax.

From 2019 all states in Canada have a price on carbon pollution. '' Canada's plan is flexible: any province can develop the cost structure that best fits the needs of its population. In order to meet the stringencies, the federal government established federal minimum standards. If a province decides not to price pollution the federal system is put in place. Increasing prices for climate change work effectively in Canada. This is encouraging industries to become more efficient and use cleaner technologies and spurred new and innovative ways to cut pollution, use energy differently as well as saving money.

- Alberta's Carbon Levy was first implemented in January 2017 and has increased every year since. However, the government cancelled their carbon levy in 2019 due to the new Federal policy on pricing.

- BC has had a climate plan that includes an economy-wide carbon tax of $30 per tonne until 2021 with increases each year.

- Ontario currently has plans to implement a cap-and-trade system while launching consultations on what it should look like when it comes into effect in 2020 - 2022

What is Output-Based Pricing System (OBPS)?

OBPS established under Part 2 of the Greenhouse Gas Pollution Pricing Act, The It’s a new pricing system that replaces the old fuel tariff rate. OBPS may be required to participate or may voluntarily opt-in for all freight carriers in Canada. The OBPS pricing system is an output-based system that calculates emissions intensity and applies a surcharge to each tonne of CO2 equivalent emitted. OBPS encourages processes to improve their energy efficiency by rewarding the ones with lower emission intensity. With this type of program, producers are reimbursed for their production costs, like the production or transportation of goods. This ensures that industries will not be put at risk by any new regulations.

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