Exemption from new fuel charge available for Ontario farmers

By Larry Davis, Director

Ontario Federation of Agriculture

In a few short weeks, a new federal fuel surcharge comes into effect in Ontario. It’s part of the federal carbon pollution pricing system and there are implications for Ontario farmers. The new fuel surcharge in Ontario will be added to fuel used for air, marine, rail and road use. But Ontario farmers will be eligible for an exemption for some forms of fuel for tractors, trucks and machinery used on the farm.

The exemption for Ontario farmers covers gasoline and light fuel oil and involves completing an official exemption form available from the Canada Revenue Agency.

The Ontario Federation of Agriculture (OFA) believes the fuel tax exemption for farmers doesn’t go far enough. The taxation of inputs to food production is a regressive tax if it can be passed on to consumers. Or it is punitive to farmers if it cannot be passed on in the price of food.

The Canadian Federation of Agriculture (CFA) and its members, including OFA are advocating for full exemption on all farm fuels, including natural gas and propane. We are hopeful this full exemption may be available some day. The federal government’s spring federal budget would be a good place to see it.

The new “carbon tax” stems from the Greenhouse Gas Pollution Pricing Act that the federal government passed in 2018 to establish a standard for reducing pollution for provinces and territories that didn’t have their own polluting pricing system. The fuel charge stemming from this act now applies to Ontario since the provincial government scraped the province’s cap and trade program last fall.

So now that the fuel tax is on its way, it’s time to complete the exemption form to cover fuel used for farming in farm trucks, tractors, vehicles not licensed to be operated on a public road, industrial machines, and stationary or portable engines.

We’re encouraging members to talk to their fuel supplier about the Fuel Charge Exemption Certificate for Farmers before the new tax goes into effect on April 1. The exemption form – L402E – can be downloaded from canada.ca and is available at any Service Canada location or from your local MP’s office.

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