News and Insights

Ontario Updates Bulletin on Coloured Fuel

Tax Development Jun 27, 2017

The Ontario Ministry of Finance has updated their bulletin on “Coloured Fuel”.  This is fuel that can be purchased exempt from Ontario fuel tax, and contains a specific type and quantity of red dye.  The fuel cannot be used in a licensed road vehicle, or any other motor vehicle or vessel that is used principally for pleasure or recreation.  It may, however, be used:

  • to fuel heating, lighting, or cooking equipment;
  • for generating electricity;
  • in the operation of unlicensed construction, forestry, mining, farm or other business equipment;
  • to test or operate commercial marine vessels;
  • for power auxiliary equipment in a motor vehicle where this equipment has a separate fuel tank;
  • by First Nations individuals and bands, as long as the fuel is acquired on a reserve; or
  • in the operation of railway equipment (by a registered operator, as long as they pay fuel tax on all fuel used in its railway operations).

The bulletin provides information on:

  • what is defined as a motor vehicle;
  • who is authorized to colour fuel;
  • where to purchase coloured fuel;
  • how to store coloured fuel; and
  • the ability to use coloured fuel for any purpose in specific remote northern locations.

The bulletin also provides information on the purchase of fuel coloured in other jurisdictions, where it is considered unauthorized and subject to Ontario’s fuel tax.  An exception to this rule is that a reciprocal agreement between Ontario and Quebec allows fuel coloured in Quebec to be used in Ontario for exempt purposes. 

Finally, this bulletin provides details on the Ministry’s authorization to conduct roadside inspections of licensed motor vehicles, and the issuance of penalties and fines under the Provincial Offences Act or Fuel Tax Act.