Motor fuel tax and carbon tax exemptions

Certain individuals and businesses may be eligible to purchase fuel without paying tax. Some exemptions apply to both taxes, while others apply only to motor fuel tax or to carbon tax.

If you’re claiming an exemption, you may have to provide information proving you qualify for the exemption, such as an exemption certificate or identity card.

There are many exemptions from motor fuel tax and carbon tax. The following are some of the most common ones.

Exemptions from motor fuel and carbon taxes

The following fuel is exempt from both motor fuel tax and carbon tax:

• Fuel sold and exported outside B.C. under certain conditions
  • Learn about exporting fuel in the bulletin Fuel Sellers (MFT-CT 001) (PDF, 241KB)
• Locomotive fuel purchased by an interjurisdictional rail service that is a registered consumer
  • Learn about claiming exemptions as a registered consumer in the bulletin Registered Consumers (MFT-CT 004) (PDF, 181KB)
• Fuel purchased on First Nations land by an eligible First Nations individual or band
  • Learn about claiming exemptions, procedures for sellers and applying for refunds in the bulletin Sales to First Nations and the Fuel Tax Exemption Program (MFT-CT 002) (PDF, 221KB)
• Coloured fuel purchased by a qualifying farmer that is delivered to their farm land
  • For more information, see the bulletin Coloured Fuels (MFT-CT 003) (PDF, 253KB)
• Marine diesel fuel purchased under the Motor Fuel Tax Act (effective April 1, 2018) or any fuel under the Carbon Tax Act for use in:
  • an interjurisdictional cruise ship
  • a ship prohibited from coasting trade under the Coasting Trade Act (Canada)
• Fuel purchased by a visiting force or member of the diplomatic and consular corps
  • Learn about claiming exemptions, procedures for sellers and applying for refunds in the bulletin Exemption for Members of the Diplomatic and Consular Corps (CTB 007) (PDF, 188KB)

Exemptions from motor fuel tax only

The following fuel is exempt from motor fuel tax:

• Jet fuel purchased by an international air service that is a registered consumer
  • Learn about registering as a registered consumer in the bulletin Registered Consumers (MFT-CT 004) (PDF, 181KB)
• Marine bunker fuel purchased for and used in the internal combustion engine of a ship
• Marine diesel fuel purchased for and used in a turbine engine that propels a commercial passenger or cargo ship
  • For more information, see the bulletin Tax Rates on Fuels (MFT-CT 005) (PDF, 239KB)
• Fuel that will not be used in an internal combustion engine (e.g. coloured heating oil or fuel used for an exempt purpose such as a lubricant or to manufacture explosives)
  • For more information, see the bulletin Tax Rates on Fuels (MFT-CT 005) (PDF, 239KB)
• Propane (including Liquefied Petroleum Gas):
  • Purchased in pre-filled or refilled cylinders (28 litres)
  • Used in a residential dwelling if certain conditions are met
  • Used by a qualifying farmer for a farm purpose if certain conditions are met
  • Learn about claiming exemptions for propane in the bulletin Propane Exemptions (MFT 014) (PDF, 265KB)

Exemptions from carbon tax only

The following fuel is exempt from carbon tax:

• Fuel purchased by an end purchaser, who at the time of sale has entered into a contract with a common carrier to export the fuel from B.C. for their own use outside B.C.
• Fuel purchased in sealed, pre-packaged containers of four litres or less
• Fuel purchased for an exempt purpose by a registrant in the B.C. output-based pricing system
  • For more information, see our B.C. output-based pricing system carbon tax exemption page
• Fuel purchased by a registered consumer, registered air service or registered marine service (i.e. certain persons that purchase fuel for exempt purposes)
  • Learn more about registering as a registered consumer, registered air service or registered marine service in the bulletins Registered Consumers (MFT-CT 004) (PDF, 181KB), Commercial Air or Marine Services (CT 005) (PDF, 171KB)

There are a limited number of exemptions from carbon tax for fuel that isn't combusted and is used in the following circumstances:

• As a raw material to manufacture anodes for use in an electrolytic process for smelting aluminum
• As a raw material in an industrial process to:
  • Produce or upgrade another fuel
  • Manufacture another substance
• As a reagent to separate out coal or ores of metal in an industrial floatation process
• In pipeline pigging
• As antifreeze in a natural gas pipeline
• In down-hole operations at a well site
• To remove natural gas liquids or impurities in the processing of natural gas
• As a refrigerant in a closed system in the processing of natural gas

If you're not a registered consumer, you must pay tax when you purchase the fuel for use in these circumstances but you may apply for a refund.

Partial exemption from carbon tax for greenhouse growers

Eligible greenhouse growers can claim a partial exemption from carbon tax on natural gas and propane they use for an eligible purpose.

For more information, see our partial exemption from carbon tax for greenhouse growers page.