Fuel Acquisition Permit

All clear kerosene is taxable under the Fuel Tax Act, except kerosene sold to the holder of a valid Fuel Acquisition Permit (FAP). A FAP allows you, as a registered consumer, to buy clear kerosene without tax for specific approved uses. You must use the fuel only for the purpose listed on your permit.

Learn more about Fuel Acquisition Permits

Kerosene

1-K Kerosene

1-K kerosene means kerosene that contains 0.04% or less sulphur and has a flashpoint of 54.4°C/130°F or higher. The flashpoint is the temperature at which vapours will ignite and burn spontaneously. 1-K kerosene is suitable for use in flue-less, or unvented, portable kerosene lights, stoves and heaters.

Buying clear kerosene

Clear kerosene which is certified as 1-K may be purchased, untaxed, by a packager holding a valid FAP issued for this purpose.

Coloured kerosene

Coloured kerosene means kerosene dyed to the specifications established by the Minister of Finance. Coloured kerosene (also called dyed kerosene) may be purchased without paying fuel tax, for non-taxable uses, such as heating, lighting, and cooking.

Sales of clear kerosene to FAP holders

Kerosene packagers

A kerosene packager is a person who packages 1-K kerosene, acquired in bulk, into any container that holds 210 litres or less (other than a fuel tank of a motor vehicle). The 1-K kerosene must be for resale to a consumer for use in cooking, heating, or lighting appliances designed to be used indoors and without venting.

"Kerosene in bulk"

Kerosene in bulk means kerosene transported, or transferred, by any means other than in a fuel tank of a motor vehicle (in which fuel for generating power in the motor vehicle is kept).

Purchase of kerosene by packagers

Designated fuel tax collectors may sell clear 1-K kerosene, without collecting fuel tax, to packagers holding valid FAPs. The sales must respect all the restrictions and conditions stated on or attaching to the packagers’ FAPs. Collectors must certify that the product sold is 1-K kerosene.

Packaging requirements for FAP holders

A packager may apply for a packager’s FAP to buy clear 1-K kerosene in bulk without paying fuel tax as long as the following conditions are met:

  • the packager will package the kerosene in containers of 25 litres or less and/or containers of between 25 and 210 litres
  • the kerosene will be packaged for resale to consumers, and will be used in certain lighting, heating or cooking appliances designed to be used, indoors, without venting

Note Packagers may repack 1-K kerosene in any size up to 210 litres. Each packager will hold only one FAP, permitting the packager to repack in one of the following three categories:

Category 1

Exclusively into containers up to 25 litres

Category 2

Exclusively into containers between 25 litres and 210 litres

Category 3

Into containers of both sizes (up to 25 litres and between 25 litres and 210 litres)

How much kerosene packagers can buy

Packagers holding a FAP in category 1 will have no limit to the amount of kerosene they can buy.

All other packagers (categories 2 and 3) will be able to buy up to a maximum of 200,000 litres of 1-K kerosene each calendar year. Purchases by all related or associated companies (that is, non-arm’s length) are included in the annual 200,000 litre limit.

When packagers go over the limit

If a packager reaches or exceeds 200,000 litre annual limitation for kerosene, the ministry will suspend the packager’s FAP for the remainder of the calendar year and notify all fuel tax collectors. In addition, the ministry will assess the packager an amount equal to the fuel tax, plus penalty and interest on the volume of untaxed fuel acquired which was over the limit.

Manufacturer’s FAP

Industrial manufacturers who have valid FAPs may buy untaxed clear kerosene, as well as other clear fuel, from designated fuel tax collectors. Manufacturers’ purchases of clear kerosene must respect the restrictions and conditions outlined in their FAPs.

Conditions for getting a manufacturer’s FAP

Industrial manufacturers may apply for manufacturers’ FAPs to buy clear kerosene (or other middle distillate fuel) exempt of tax. To qualify for this tax exemption, the purchased fuel must be delivered to an authorized location for use by the FAP-holder as a raw material which will either be made into or become part of goods for sale. The fuel or the manufactured product must not be used to generate power in a motor vehicle.

No purchase limit is placed on this type of permit.

Sales of kerosene by a collector to a FAP holder

Collectors’ responsibilities

Designated fuel tax collectors may sell untaxed clear kerosene to FAP holders who are entitled to receive the product without paying tax. Collectors must ensure that purchasers present them with valid FAPs at the time of sale. Collectors are required to report such sales on their monthly return to the ministry. Additional information required on the invoice delivered to a purchaser include the collector’s registration number and the purchaser’s FAP number.

Collectors and FAP-holders who buy the untaxed clear kerosene must ensure that the conditions stated in their permits are met.

Sales of kerosene by a non-collector to a FAP holder

Non-collectors’ responsibilities

Dealers who are not authorized fuel tax collectors must pay the tax on clear kerosene purchased from their suppliers.

If dealers sell clear kerosene untaxed to FAP holders, the dealers may qualify for refunds from the ministry of the tax paid to their suppliers. Or, dealers may recover the tax from their suppliers, if the suppliers are designated fuel tax collectors.

Collectors, as agents of the Minister, are required to exercise due diligence to ensure that untaxed clear kerosene sold is not for a taxable use. Collector will not be held responsible for fuel tax on clear kerosene delivered to holders of, and in accordance with, valid FAPs, where the collector maintains all the following:

  1. a copy of the FAP valid for the period in question
  2. copies of all bills of lading, uniform manifests, or invoices indicating the volume of kerosene delivered to the FAP-holder at the authorized location(s) during that time
  3. certification of the delivery by the driver(s)

FAP holder requirements and restrictions

Security

FAP holders must post security in an amount equal to the tax that, except for the FAP, would have been payable on the FAP-holder’s average three months’ receipts of clear fuel, or $100,000.00, whichever is greater.

General restriction

FAP holders must not use kerosene or other fuel acquired under a FAP, for any purposes other than the purposes stated by the permits and must ensure that the conditions stated in the permits are met.

Requirement to produce FAP

FAP holders must produce their FAPs to their suppliers at the time of purchase or pay the tax.

Reporting requirement

FAP holders must, by the 25th of the month, send the ministry fuel tax returns (Form FT814), which report all fuel acquired under the FAP. Form FT814 also reports the fuel sold or used in the preceding calendar month.

Guide for Completing the Fuel Acquisition Permit Holder Return FT814

FAPs are not transferable

FAP holders must immediately notify us of any change of name or nature of their businesses, or in case of the loss or destruction of the FAP.

Penalties for noncompliance

Failure to comply with the Act or regulations, or failure to abide by a condition, or a limitation under a FAP can result in a fine of up to $10,000. This fine is in addition to our assessment for fuel tax, penalties and interest, and suspension or cancellation of the permit.

Coloured kerosene

A FAP is not required for purchases of coloured kerosene for non-taxable uses, such as lighting, heating, and cooking.

Request a Fuel Acquisition Permit

You can download an FAP application, or contact:

Ministry of Finance
Account Management and Collections Branch
33 King Street West
Oshawa ON L1H 8H9