The British Columbia Ministry of Finance recently issued this new bulletin which replaces Notice 2008-022, “Self-Assessing Carbon Tax”. This new bulletin provides relevant information to purchasers on how and when to self-assess and pay motor fuel tax and carbon tax in British Columbia. The information in this bulletin applies to individuals and businesses; however, it does not apply to the following group of purchasers or services in British Columbia:
- registered consumers; registered air services;
- registered marine services;
- commercial airlines; commercial marine services; or
- fuel used in International Fuel Tax Agreement (IFTA) commercial motor vehicles transporting passengers or goods between jurisdictions.
Where fuel is purchased or received in British Columbia and used to generate power in internal combustion engines, the fuel will be subject to motor fuel tax and carbon tax. If the correct amount of motor fuel and/or carbon tax is not paid at the time of acquisition, the difference must be self-assessed.
For example, self-assessment of motor fuel tax will generally be required in the following circumstances:
- fuel manufactured in, or brought into the province for use, including fuel brought into the province in a tank on a truck or trailer;
- fuel brought into the province in excess of 182 litres in a tank of a motor vehicle for use in that vehicle (other than an IFTA commercial vehicle);
- fuel purchased in British Columbia where tax is not charged or undercharged at the time of purchase; and
- fuel, such as coloured fuel or heating oil, used for an unauthorized purpose.
Fines, penalties and/or imprisonment may be imposed by the Ministry where fuel is used for unauthorized purposes.
Similar to motor fuel tax, self-assessment of carbon tax is required in the following situations:
- fuel manufactured in, or brought into the province for use, including fuel brought into the province in a tank on a truck or trailer;
- fuel brought into the province in excess of 182 litres in a tank of a motor vehicle for use in that vehicle (other than an IFTA commercial vehicle);
- fuel purchased in British Columbia where tax is not charged or undercharged at the time of purchase;
- when combustibles such as tires and peat are burnt; and
- when fuel is incinerated, without the prior payment of carbon tax.
In addition, a number of exceptions to the self-assessment rules for motor fuel tax and carbon tax are outlined in the bulletin. Under the Motor Fuel Tax Act, returns are required to be filed and fuel tax paid on the 15th day of the month following the end of the reporting period in which the fuel was used . Similarly, the Carbon Tax Act requires tax returns to be filed and carbon tax paid on the 28th day of the month following the end of the reporting period in which the fuel was used.