Canadian Excise Duties on Fuel Bills and How to Claim Them
This article will focus specifically on Canadian Mineral Oil Tax (excise duties)
USA-based Private Air Charter Companies are losing hundreds of thousands of dollars in unclaimed excise duties on fuel bills every year. With popular destinations like Canada, France and Germany offering retrospective opportunities to reclaim the lost excise duties (mostly known as Mineral Oil Tax), no air charter company needs to suffer these losses.
What are Canadian excise duties on fuel?
Excise taxes on fuel bills are often referred to as Mineral Oil Tax. This is a tax levied only on the jet fuel amount when a plane refuels, on a per litre (or gallons) basis. There is no standardized naming for the MOT. Depending on the country and the fuel supplier, MOT is referred to as TIPP, TIPCE, Excise Duties, Fuel Tax, Special Tax and Petroleum Tax. in Canada it is often referred to as excise taxes/duties.
The excise duties exist as a separate line item on your fuel bill. Often GST will also be present on the fuel bill and should be treated separately as these are claimed from two different authorities - GST is claimed from the Candia tax authorities and excise duties are claimed from the customs officials (often as local as each airport).
Why is your company incurring Canadian Excise Duties on its fuel bills?
Although your company should be exempt from incurring excise duties at all if it possesses the required documentation (Usually an AOC is enough), companies may still incur excise taxes when the following scenarios occur:
The fueler mistakenly assumes the flight is of a private leisure nature.
The pilot does not present the AOC and correct documentation to prove the commerciality of the flight.
The pilot declares the flight incorrectly.
A lack of knowledge of these exemptions to start off with.
How to retrospectively claim Canadian excise duties?
The Canadian Customs officials grant retrospective refunds to air charter companies who were mistakenly charged excise duties and on flights that were of a commercial nature. To elaborate, that means that if the flight where the refueling took place was for a non-scheduled commercial flight or a private company jet being used for a business trip, then the excise duties is claimable.
Deadlines and Requirements
The Canadian deadline for excise duties on fuel claims is two years from the uplift date. It’s important to note that the uplift date may differ from the invoice date (very rarely). To illustrate, if your air charter company uplifts fuel on the 3 January 2021, then you have until the 3rd January 2023 to claim it. Ultimately, you’re entitled to claim back two years worth of excise duties retrospectively. However, extensive documentation is required in order for the refund to be granted successfully.
For a successful refund, you’d need the following documentation:
The fuel invoice
Fuel delivery receipt
Air Operator Certificate with supporting annexures
Certificate of registration of aircraft
Certificate of airworthiness
Outsourcing a very administrative process to specialists
The process leading to a successful Canadian excise duties refund is onerous, administrative and technical. Collecting the required documentation and knowing how to submit it to the local customs authorities can be a heavy burden on an often small team within an Air Charter company’s finance team. Therefore, many choose to outsource the refund recovery to specialists such as us.
We help hundreds of Air Charter companies in over 40 different countries to recovery their Mineral Oil tax and aviation VAT on fuel bills and ground handling costs - a saving that often equates to more than half the total value of the bill. What could your business do with that kind of cash injection to its bottom line?
Download our practical guide to help you find savings on your fuel bill: