Vol. 143, No. 14 — July 8, 2009

Registration

SOR/2009-195 June 18, 2009

CUSTOMS TARIFF
EXCISE TAX ACT

Regulations Amending the Ships’ Stores Regulations (2009)

P.C. 2009-1001 June 18, 2009

Her Excellency the Governor General in Council, on the recommendation of the Minister of Public Safety and Emergency Preparedness and the Minister of National Revenue, hereby makes the annexed Regulations Amending the Ships’ Stores Regulations (2009) pursuant to

(a) paragraphs 99(g) (see footnote a) and (g.1) (see footnote b) of the Customs Tariff  (see footnote c); and

(b) subsections 59(3.2) (see footnote d) and (3.4) (see footnote e) of the Excise Tax Act (see footnote f).

REGULATIONS AMENDING THE SHIPS’ STORES REGULATIONS (2009)

AMENDMENTS

1. Subsection 2(1) of the Ships’ Stores Regulations (see footnote 1) is amended by adding the following in alphabetical order:

“biodiesel fuel” means renewable fuel that is suitable for use in internal combustion engines of the compression-ignition type; (carburant biodiesel)

“renewable fuel” includes fuel that is produced from biomass, waste material or feedstock of biological origin, whether or not the fuel is blended with a petroleum product; (carburant renouvelable)

2. (1) Paragraphs 2(1)(b) and (c) of the schedule to the Regulations are replaced by the following:

(b) diesel fuel and biodiesel fuel

(c) petroleum products and renewable fuels³, except diesel fuel, biodiesel fuel and lubricants

(2) Paragraph 2(3)(a) of the schedule to the Regulations is replaced by the following:

(a) diesel fuel and biodiesel fuel

3. Paragraph 3(1)(h) of the schedule to the Regulations is replaced by the following:

(h) for the purposes of the Excise Tax Act, petroleum products and renewable fuels, except lubricants

4. Paragraph 7(2)(b) of the schedule to the Regulations is replaced by the following:

(b) petroleum products and renewable fuels¹⁰, except lubricants

5. The schedule to the Regulations is amended by replacing “petroleum products, except lubricants” with “petroleum products and renewable fuels, except lubricants” in the following provisions:

(a) paragraph 1(1)(l);

(b) paragraph 1(2)(l);

(c) paragraph 1(3)(l);

(d) paragraph 1(4)(l);

(e) paragraph 1(5)(l);

(f) paragraph 4(1)(d);

(g) paragraph 4(2)(d);

(h) paragraph 7(1)(k); and

(i) paragraph 7(3)(i).

COMING INTO FORCE

6. (1) Subject to subsection (2), these Regulations come into force on the day on which they are registered.

(2) For the purposes of the Excise Tax Act , these Regulations are deemed to have come into force on April 1, 2008.

REGULATORY IMPACT
ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Issue and objectives

The Schedule to the Ships’ Stores Regulations designates certain classes of goods as ships’ stores where they are used on qualifying conveyances. Such classes of goods are generally eligible for relief from the duties and taxes normally imposed. The current list of goods eligible for exemption includes “petroleum products” and “diesel fuel” but does not extend relief to renewable fuels.

The objective of this regulatory action is to amend the Schedule to the Regulations such that renewable fuels will be eligible for relief from the duties and excise taxes that would otherwise apply.

Description and rationale

The Schedule to the Regulations is being amended such that “renewable fuels” are being added to the list of goods that qualify as ships’ stores. The effect of this is that renewable fuels that qualify as ships’ stores will be eligible for the relief of the duties and taxes that would otherwise apply. For excise tax purposes, these amendments will be retroactive to April 1, 2008.

These amendments reflect market changes to convert to the use of renewable fuels and ensure that those in the industry that have converted, or plan to convert, to the use of renewable fuels will not be at a competitive disadvantage. No other alternatives were considered.

Some minor additional operating costs will accrue to the Canada Revenue Agency (CRA) to process a limited number of refund claims for excise tax, retroactive to April 1, 2008. Otherwise, there are no additional annual government costs or savings associated with these amendments. It was always intended that fuel used as ships’ stores be relieved of the duties and excise taxes that would otherwise apply. These amendments simply reflect market changes to convert to the use of renewable fuels and maintains the 100% exemption for their use as ships’ stores.

Consultation

The Department of Finance was consulted and expressed support for these amendments.

Implementation, enforcement and service standards

These amendments offer no unique legal or policy issues and can be dealt with using existing compliance and enforcement resources.

Contact

Phil McLester
Director, Excise Duties and Taxes Division
Place de Ville, Tower A, 20th Floor
320 Queen Street
Ottawa, Ontario
K1A 0L5
Telephone: 613-954-0111
Fax: 613-954-2226
Email: Phil.McLester@cra-arc.gc.ca

Footnote a
S.C. 2002, c. 22, s. 424(1)

Footnote b
S.C. 2002, c. 22, s. 424(1)

Footnote c
S.C. 1997, c. 36

Footnote d
S.C. 2002, c. 22, s. 427(1)

Footnote e
S.C. 2003, c. 15, s. 96

Footnote f
R.S., c. E-15

Footnote 1
SOR/96-40

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