This overview provides general information about Ontario’s fuel (diesel) tax rules. It should not be considered as a substitute for the Fuel Tax Act (the Act) and regulations. If you’re unsure about anything in this online book, please talk to a lawyer or an accountant.

Fuel products and tax rates

If you operate an internal combustion engine that uses clear diesel fuel, you will pay tax on the fuel you buy. Biodiesel is taxable in the same way as clear diesel fuel.

Fuel tax is included in the price you pay at the pump and, unlike the HST, does not appear as a separate line item on your receipt.

The fuel tax rates are:

  • 9.0¢ per litre
  • 4.5¢ per litre for railway equipment

Data: historical fuel tax rates

People who do not pay fuel tax

Everyone who buys fuel products in Ontario must pay fuel tax, no matter how they plan to use the products, except:

Fuel tax refunds (4-year time limit applies)

Coloured fuel

Coloured fuel is tax exempt diesel that has been dyed red and carries a chemical marker.

Coloured fuel may be used in:

  • heating, lighting or cooking
  • generating electricity
  • unlicensed construction, forestry, mining, farm and other business equipment
  • operating commercial marine vessels
  • auxiliary equipment of a vehicle where the equipment has its own separate fuel tank
  • operating railway equipment provided that the operator is registered with the Ministry of Finance and pays fuel tax on all fuel used in its railway operations

First Nations individuals who are registered under the Indian Act (Canada) and First Nations bands may use coloured fuel in licensed vehicles if they get the fuel on a reserve.

You cannot use coloured fuel in a motor vehicle that must be licensed under the Highway Traffic Act.

Data: historical dye costs

Fuel used by railways in Ontario

All railways operating in Ontario as part of a public transportation system must register as a registered consumer. This includes railways that commercially transport goods or passengers.

Railway locomotives can use coloured or clear fuel. Regardless of the fuel used, the tax rate is 4.5¢ per litre and the railway operator must remit the tax with their Fuel Tax Railway Return.

Register for a fuel tax account

You need to register with us if you intend to conduct business as a:

For more information about how to register for a fuel tax account, call the Ministry of Finance at 1-866-ONT-TAXS (668-8297).

The Minister of Finance (minister) may impose reasonable conditions, limitations and restrictions on permits, registrations or designations.

As an exception, importers who are not registered must, upon entry into Ontario from outside Canada, pay to the minister an amount equal to the tax. This amount is payable by certified cheque, bank draft, or money order, at the time of entry. The Canada Border Services Agency (CBSA) collects this amount for Ontario at border entry points.

List of registration applications

Fuel and gasoline tax registrant list

We maintain a list of people registered under the Act to help identify people authorized by the minister to sell and distribute fuel products. You can subscribe to email alerts to stay informed of changes to registrant status (for example, authorized, suspended and cancelled registrations).

Fuel and gasoline tax registrant list

Collectors

Collectors are wholesalers designated in writing by the minister to act as agents of the minister.

Generally, Ontario imposes a direct tax on fuel products, which is payable by consumers. However, to make tax collection simpler, ministry-designated collectors collect fuel tax at the wholesale level and remit this amount to the minister. Collectors include the tax amount on the invoice to the retailer. The retailer, in turn, recovers the tax amount when they sell the fuel to the consumer.

You must meet all the following requirements to become a designated collector:

  • have wholesale sales of fuel of not less than 51% of total sales in Ontario in terms of volume with respect to fuel
  • not exceed 6 consecutive months without sales or deliveries of fuel for resale in Ontario to retain the collector designation
  • post security of the greater of $1 million or an amount equal to 3 months average tax collectable and payable

Reporting fuel exchanges between a collector and non-collector

When product is exchanged between a collector and a non‑collector, the collector will collect and remit the tax on the taxable product delivered to the non‑collector.

A collector receiving product through a product exchange with a non‑collector needs to pay the tax to the non‑collector. The collector can then claim a credit for tax already paid on the fuel by the non‑collector. The collector must report on their monthly return their tax paid purchase when the product is received and may claim the credit on the same return.

Qualified motor vehicles travelling into or out of Ontario

If you are an interjurisdictional carrier operating a qualified motor vehicle, you may register under IFTA to obtain an IFTA license and decals to display on your vehicle.

If the vehicle is not licensed under IFTA and is considered a qualified motor vehicle, then you must purchase a one‑time single trip permit from each province or state in which you intend to travel. You can purchase permits from single trip permit agencies.

Posting security

You may need to provide security through a surety bond or letter of credit before the minister will issue you a permit, registration certificate or a designation.

In most cases, the amount of security required is an amount equal to 3 months’ average tax collectable and payable or $1 million, whichever is greater.

Acceptable forms of security include:

You must apply for a new designation or registration certificate and provide new or revised security if you are a new legal entity resulting from:

  • the reorganization of an existing collector or registrant
  • any entity that undergoes a substantial change in ownership or control

File a fuel tax return

We require registrants to file monthly fuel tax returns to maintain fuel tax accountability.

You may face fines or penalties if your return or payment is late, incomplete or if you don’t pay the full amount owing.

File and pay online

The fastest and most convenient way to file your return and make payments is online.

Use ONT-TAXS online to:

  • file your return
  • make secure payments
  • access your account anytime

ONT-TAXS online is available 24 hours a day, 7 days a week, and provides instant confirmation of your submission.

File and pay in other ways

If you cannot file online, you can:

  • visit select ServiceOntario locations
  • email commodity.tax@ontario.ca
  • mail your return and payment to:
    Ministry of Finance
    33 King Street West, PO Box 620 
    Oshawa ON L1H 8E9

The Ministry of Finance will mail you a personalized tax return each month.

Fuel retailers are not required to complete returns. However, they must keep records and books of account at their principal place of business for all fuel purchases and sales for 7 years.

Guides to help you complete your fuel tax returns and schedules

Due dates

Designated collectors, registered importers and registered exporters

Send us your completed returns, along with any fuel tax collectable and payable, by the 25th day of the month following the month of the sale, import or export, as applicable.

For example, fuel sold in June must be reported on the return that is due July 25.

Interjurisdictional transporters

Send us your completed returns by the 25th day of the month following the month in which the fuel was transported.

For example, fuel that was transported in June must be reported on the return that is due July 25.

Registered manufacturers

Send us your completed returns by the 25th day of the second month following the month to which the return relates.

For example, fuel that is manufactured in June must be reported on the return that is due August 25.

Penalties and offences

Ontario’s enforcement program includes a range of audit, investigation and inspection activities. The Act provides for numerous fines and penalties. Here are some examples.

Failure to Collect

A collector, importer, wholesaler or retailer who fails to collect the required tax may need to pay a penalty equal to 110% of the tax not collected.

Further, any collector, importer, wholesaler, or retailer who fails to collect the tax required, is liable upon conviction, to pay a fine equal to 3 times the tax not collected.

Failure to File

You may be assessed penalties of 10% of the tax collectable and 5% of the tax payable if your returns are not filed, are filed late or if less than the required amount of tax is remitted.

Excess Unverifiable Losses

Available inventory is the amount of fuel that must be accounted for. It is the total opening fuel or gasoline inventory plus additions to inventory during a selected period, less the closing inventory.

Over a 36-month period, tax collectors must reconcile the volume of products:

  • in opening inventories
  • amounts received
  • amounts manufactured

with the volume of product that can be accounted for by:

  • taxable sales
  • tax exempt sales
  • exports
  • closing inventories
  • losses from known causes (theft, fire, contamination, reported spillage)

An unverifiable loss exists where an amount of fuel or gasoline cannot be accounted for by registered collectors. A person’s unverifiable loss is that portion of the available inventory which cannot be shown to have been sold, lost, stolen, destroyed, contaminated, consumed or distributed.

Collectors may be assessed a penalty if product loss is found to be more than the prescribed threshold. The prescribed threshold for an unverifiable loss of:

  • fuel is 0.125% (one-eighth of 1%)
  • gasoline is 0.25% (one-quarter of 1%)

The penalty, if assessed, will be equal to the amount of tax that would have been collectable if the excess unverifiable product loss had been sold to a consumer in Ontario.

Tax settlement agreement between Ontario and Quebec

The tax settlement agreement between the governments of Ontario and Quebec provides for the settlement of tax on the transfers of fuel between the 2 provinces. This ensures the correct amount of tax is paid to the province in which the product is consumed without importers and exporters having to reconcile their returns if they remitted tax in a province in which the product was not consumed.

Importers and exporters, and interjurisdictional transporters are still required to register with, and report to the minister. However, this agreement reduces the tax remitting, refund, and administrative requirements for importers and exporters not registered as collectors who engage in cross border transfers of gasoline and aviation fuel.