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Tariff Notice – 21
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Green Levy (Excise Tax) on Fuel-Inefficient Vehicles
Frequently asked questions
- When is the Green Levy applied?
- What kind of vehicle is affected?
- Does it apply to used vehicles?
- What does “put into service” mean?
When is the Green Levy applied?
The Green Levy excise tax applies to automobiles delivered by a manufacturer or producer to a purchaser after March 19, 2007, and each vehicle imported into Canada after that day unless it has been put into service before March 20, 2007.
It does not apply to a vehicle for which a written agreement has been entered into before March 20, 2007, between a person in the business of selling vehicles to consumers and a final consumer, and for which possession is taken by the final consumer before July 2007.
Does the Green Levy apply if I purchased my vehicle before March 20, 2007?
The Green Levy does not apply to new or used vehicles purchased before March 20, 2007.
What kind of vehicle is affected?
The Green Levy applies to new vehicles that are designed primarily to carry passengers, including station wagons, vans and sport-utility vehicles, with fuel-efficiency ratings of 13.0 L/100 km or more. The excise tax does not apply to pick-up trucks and certain other types of specialty vehicles may also be excluded.
What about E85 gas users?
Certain automobiles known as flex-fuel vehicles are capable of using both E85 ethanol and unleaded gasoline. For the purposes of this excise tax, only the unleaded gasoline fuel-efficiency rating will be used.
What if the vehicle is not listed in the Fuel Consumption Guide?
If no rating can be found in the Fuel Consumption Guide for a particular vehicle, city and highway fuel-consumption ratings for the most similar model and attributes may be used.
Does it apply to used vehicles?
The new Green Levy also applies to used vehicles imported into Canada in order to meet domestic tax requirements. Some importers are licensed with the Canada Revenue Agency (CRA) to pay the tax on importations directly to the CRA. If you are not licensed, then the tax is payable at the time of importation of the vehicle and it is collected by the CBSA as duties under the Customs Act. The tax will only apply to imported used vehicles if the vehicle was put into service on or after March 20, 2007. The tax does not apply to vehicles that were put into service before March 20, 2007.
- Example 1:
Importer X, an individual, purchases a "fuel-inefficient" vehicle in the United States that was put into service (e.g. sold to a U.S. resident/dealer who is not Importer X) before March 20, 2007, and imports the vehicle on July 6, 2007. The excise tax is not applicable. - Example 2:
A new "fuel-inefficient" vehicle is purchased by a U.S. car rental company on March 21, 2007, and used for six months. It is subsequently sold to Importer Y, an individual, who imports it to Canada, as a used vehicle, on December 14, 2007. The excise tax is applicable. - Example 3:
A particular type of "fuel-inefficient" vehicle is imported by a Canadian national distributor car dealership on September 14, 2007. The excise tax would be payable unless the importer defers payment as a licensed importer. The vehicle would then be subject to the excise tax at a subsequent point of sale and the tax would be remitted to the CRA.
What does "put into service" mean?
A vehicle is considered to be "put into service" in any of the following situations, whichever occurs first:
- the automobile is registered with a motor vehicle authority;
- the vehicle gets licence plates;
- the warranty has been put in place; or
- the vehicle has been appropriated by a dealer for his or her own use.
It is the importer's responsibility to provide acceptable proof to the CBSA that demonstrates when the vehicle was put into service. The most common instance is when a new vehicle is sold by a retailer to a consumer.
What is considered acceptable proof that the vehicle was put into service before March 20, 2007?
This information is often available from the dealer, even on used vehicles, as it is the same date as is used to determine if there is any residual warranty remaining on the vehicle. In other cases, proof of original purchase, previous registration of title, etc., may be acceptable to the CBSA to prove the vehicle was in service and being used before March 20, 2007.
