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If you operate a commercial truck or bus in more than one province or state, you are an interjurisdictional carrier and you should know about the International Fuel Tax Agreement.
What is IFTA?
IFTA is a cooperative agreement among the Canadian provinces and most American states to make it easier for interjurisdictional carriers to report and pay taxes on the motor fuels they use.
The agreement allows registered interjurisdictional carriers to get one licence, issued by their base jurisdiction, to report and pay motor fuel taxes to a single jurisdiction.
Under IFTA, interjurisdictional carriers report the amount of motor fuel consumed and the distance travelled in each jurisdiction. Member jurisdictions work together to track, collect and share the taxes payable on motor fuels such as gasoline, diesel, propane, gasohol, methanol, ethanol, natural gas and biodiesel.
Vehicles registered under IFTA display identifying decals issued by their home jurisdiction.
Registering gives you the benefit of:
- having one IFTA licence to allow travel in all member jurisdictions, and
- dealing with one jurisdiction for the reporting and payment of motor fuel taxes.
IFTA credentials are valid for travel in the 10 provinces in Canada and 48 states in the U.S.
Six jurisdictions are not IFTA members and IFTA credentials are not valid for travel there:
- Canada: Northwest Territories, Nunavut, Yukon Territory
- United States: Alaska, Hawaii, District of Columbia.
Registering for IFTA
You should register for IFTA with Ontario if:
- your commercial vehicle is a motor vehicle used for business purposes and:
- has two axles and a gross vehicle weight or registered gross vehicle weight of more than 11,797 kg (26,000 pounds)
- three or more axles regardless of weight, or
- a total registered gross vehicle weight of more than 11,797 kg (26,000 pounds) when used in combination with a trailer.
- you operate the vehicle from a place of business in Ontario
- you keep the vehicle records in Ontario or will make the records available to the Ontario Ministry of Finance
- the vehicle travels in Ontario and at least one other jurisdiction.
A recreational vehicle such as a motor home or a pickup with a camper is not considered a qualified motor vehicle when used exclusively for personal pleasure. Vehicles used in connection with a business operation are not considered recreational.
Transporting goods for someone else
When you transport goods for someone else, a contract may hold the carrier and not the vehicle owner responsible for interjurisdictional reporting and payment of fuel taxes. The contract needs to identify:
- the start and end dates of the agreement
- who is responsible, the carrier or the vehicle owner, for reporting and paying the motor fuel tax.
The responsible party identified in the contract should obtain the IFTA licence.
Single trip permit
If you do not have a valid IFTA licence and occasionally travel into other jurisdictions, you can buy a single trip permit. The permit can be purchased on a trip-by-trip basis from authorized permit agents.
A single trip permit allows qualified vehicles conditional travel in another jurisdiction. The permit is valid for one vehicle making a single journey into another jurisdiction for a pre-determined distance and time period. Single trip permits may also include other fees in addition to the fuel tax.
IFTA licence and decals
To receive your IFTA licence and decals:
- complete the IFTA application, and
- pay the required decal fee of $10 per set.
Mail your completed application and payment to:
Ministry of Finance
33 King Street West
PO Box 625
Oshawa ON L1H 8H9
Licence and decals: valid for one year
After registering, the Ministry of Finance will issue a single IFTA licence for your fleet of qualified vehicles. You will also receive two decals for each qualified motor vehicle. The licence and the decals are valid for one year from January 1st to December 31st, and need to be renewed each year.
Prior to the end of the year, a renewal application will be issued automatically to eligible IFTA licensees.
Rules to follow
- Affix the decals to the specified location.
- Carry a photocopy of the IFTA licence in each of your qualified motor vehicles.
- File all IFTA quarterly tax returns and pay any motor fuel taxes by the due date.
- Keep all records to support the information reported on your IFTA tax return in case you are selected for a tax audit.
Driving marked vehicles with emergency lights, uniformed inspectors monitor truck traffic throughout the province. Inspectors have the authority to stop and detain commercial motor vehicles for inspection purposes. They ensure compliance by:
- Inspecting for valid IFTA registration documents.
- Checking the carriers account status with its base jurisdiction.
- Taking samples from fuel tanks of diesel vehicles to identify operators who may be avoiding payment of fuel tax, by using coloured fuel (i.e., tax exempt furnace oil), to power their vehicle. Any presence of red dye in diesel fuel disqualifies that product from use in a motor vehicle.
- Checking for other potential violations in the interest of public safety.
A person committing an offence relating to the improper use of coloured fuel in Ontario is liable to a fine and related charges on first offence of $465. Fines of up to $1 million or imprisonment for up to two years are possible for other offences under the Fuel Tax Act, such as tampering with coloured fuel. Offenders will also be audited and may be assessed tax, penalties and interest.
Filing a quarterly IFTA tax return
As an IFTA licensee, you report your fuel purchases and jurisdictional travel within one month after the end of every quarter. The Ministry of Finance will mail an IFTA tax return to you at least 30 days before each due date.
On your IFTA tax return, you will report how much tax-paid fuel you purchased and the distance travelled in each jurisdiction. You will balance overpayments in one jurisdiction against amounts owed in other jurisdictions. If the net result is an underpayment, you will send one payment to Ontario. If the net result is an overpayment, you will receive one refund from Ontario.
The IFTA Tax Rate Matrix is the official source for all IFTA fuel tax rates.
To view the IFTA Tax Rate Matrix, please visit the International Fuel Tax Association's website.
IFTA tax returns must be postmarked or hand delivered by the due date, which is shown on the top of every return. The reporting quarters and due dates are:
|IFTA Reporting Quarter||Return Due Date|
|1st Quarter - January to March||April 30|
|2nd Quarter - April to June||July 31|
|3rd Quarter - July to September||October 31|
|4th Quarter - October to December||January 31|
File and pay on time
If you do not file your IFTA tax return or pay any taxes owing:
- you may be charged interest and penalty, and
- your IFTA licence may be cancelled.
The Ministry of Finance may require that you post security:
- if you fail to file IFTA tax returns or not pay motor fuel taxes (including interest and penalties) on time
- if an audit reveals that a guarantee is necessary to protect the interests of IFTA member jurisdictions, or
- if a cheque you sent to the ministry is returned for lack of funds.
Cancel an IFTA account
The Minister of Finance will cancel an IFTA licence at your request if:
- you have filed all IFTA tax returns, paid all taxes, penalties and interest due, and
- you are no longer operating qualified motor vehicles or you prefer to use single trip permits.
To cancel your account, check off the'"Cancel IFTA licence' section on your latest IFTA tax return and enter the last date of business. You can also write to the Ministry of Finance and request your account be cancelled. In your letter, state the last day of business.
You are required to:
- destroy the original licence and any copies, and all decals, and
- keep all records to support your IFTA tax returns for four years from the return due date or filing date, whichever is later.
The ministry will notify all IFTA member jurisdictions of your cancellation.
Revoke an IFTA account
The Minister of Finance may revoke your IFTA licence if you fail to:
- file complete IFTA tax returns on time
- pay taxes in full, or
- follow the ministry’s record-keeping requirements.
In the absence of a valid IFTA license, qualified vehicles must obtain separate single trip permits prior to any interjurisdictional travel.
Re-activate an IFTA account
Before your IFTA licence can be re-activated, the Minister of Finance may require security. You will be informed of any security requirement once you have:
- filed all outstanding IFTA tax returns
- paid whatever you owe on your account
- completed a new IFTA application form
- paid for the decals you need for your vehicles, and
- sent a letter asking for your account to be re-activated, stating the account number and the first day of business.
International Registration Plan
All interjurisdictional carrier vehicles weighing more than 11,793 kg should also register under the International Registration Plan. This plan allows for the distribution of registration fees for commercial motor vehicles traveling through more than one member province or state.
- Application for International Fuel Tax Agreement Registration
- Direct Deposit Request / Direct Deposit Authorization
- Guide for completing the Application for IFTA Registration
- Guide for Completing the International Fuel Tax Agreement Quarterly Tax Return and Schedule