Federal Carbon Tax Fuel Exemption

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Source: Beef Farmers of Ontario

On April 1, 2019, the federal carbon tax comes into effect in provinces where carbon pricing systems don’t already exist. With the provincial cap-and-trade program cancelled, this includes Ontario.

The federal carbon pricing program puts a surcharge on fossil fuels, but fuel used for farming is exempt from the carbon levy. For the exemption to apply, the fuel must be delivered to a farm and exclusively used in the operation of eligible farm machinery and in the course of farming activities. This includes farm trucks, tractors, stationary or portable engines, etc. Fuel used for cars or for equipment used to heat or cool a building do not qualify for the exemption. At this time, farm fuel purchased from cardlock facilities is not eligible for the exemption.

A full listing of eligible machinery, vehicles and farming activities is available on CRA’s website

To have the carbon surcharge exempt from farm fuel, the Fuel Charge Exemption Certificate for Farmers (Form L402 from CRA) must first be completed by producers and their fuel suppliers.

The exemption form (example below) is available through the CRA’s website. Producers must provide a copy to their fuel distributor and should keep a copy for their own records.

There is no hard deadline to complete the exemption certificate, but it is BFO’s understanding that the form must be completed before April 1 for farm fuel purchased after that date to be exempt from the carbon surcharge. The exemption certificate does not have an expiry date.

For more information, the OFA has a factsheet on completing the form.

Fuel Charge Exemption Certificate for Farmers

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