NTERJURISDICTIONAL CARRIER S ANUALcollections.ola.org/mon/20000/277859.pdfPage 4 Interjurisdictional...

SEPTEMBER 2007

INTERNATIONAL FUEL TAX AGREEMENT (IFTA)INTERJURISDICTIONAL CARRIER’S MANUAL

MINISTRY OF REVENUE

FURTHER INFORMATION ABOUT IFTA

Ministry of Revenue Telephone Numbers

Canada and the U.S. (toll free) 1 800 263-7775Services en français (numéro sans frais) 1 800 668-5821Other Locations (long distance) 905-433-6450TTY (Teletypewriter) 1 800 263-7776

Fax Numbers

Ministry of Revenue, Client Accounts & Services Branch 905-436-4511905-433-5680

INTERJURISDICTIONAL CARRIER’S MANUAL

This publication provides information about the International Fuel Tax Agreement (IFTA) program and outlinesthe requirements and responsibilities of a licensee. The information in this publication does not replace thelaw found in the Fuel Tax Act or Gasoline Tax Act and related regulations or the IFTA governing documents.

Tax and Decal Fee Payments For More Information

Ministry of Revenue Ministry of RevenueRevenue Operations and Client Accounts and Services BranchClient Services Branch IFTA Program33 King Street West 33 King Street WestPO Box 620 PO Box 625Oshawa ON L1H 8H5 Oshawa ON L1H 8H9

This publication and various English and French tax materials published by the Ministry of Revenue may beobtained online at www.rev.gov.on.ca.

http://www.rev.gov.on.ca/

TABLE OF CONTENTS

Introduction............................................................................................................................................................ 4What is IFTA? ................................................................................................................................................... 4Who is Eligible to Register Under IFTA? ............................................................................................................ 4What is a Qualified Motor Vehicle? .................................................................................................................... 4Enforcement ...................................................................................................................................................... 5

Registration and Renewal Procedures ............................................................................................................... 6Initial Application for Licence ............................................................................................................................ 6IFTA Licence ..................................................................................................................................................... 7IFTA Decals ...................................................................................................................................................... 7Additional IFTA Decals ..................................................................................................................................... 7Decal Fees ....................................................................................................................................................... 7Annual Licence Renewal .................................................................................................................................. 8Contract Agreements ........................................................................................................................................ 8

Reporting Requirements .................................................................................................................................... 10Quarterly Fuel Tax Returns ............................................................................................................................. 10Amended Returns ........................................................................................................................................... 11Due Dates ....................................................................................................................................................... 11Measurements for Fuel Tax Reporting ........................................................................................................... 11Calculating Kilometres per Litre ..................................................................................................................... 12Non-taxable Distance ..................................................................................................................................... 12Non-taxable Fuel Use (Tax Exempt Fuel) ...................................................................................................... 12

1. Biodiesel ............................................................................................................................................... 122. Power Take Off (PTO) ........................................................................................................................... 12

Tax Due and Credits ....................................................................................................................................... 13

Failure to File a Quarterly Fuel Tax Return ....................................................................................................... 14Failure to File a Complete Fuel Tax Return .................................................................................................... 14Failure to Pay Fuel Taxes ............................................................................................................................... 14Penalty and Interest Provisions ...................................................................................................................... 14Failure to File Fuel Tax Returns...................................................................................................................... 15

Licence Cancellation, Revocation and Reinstatement.................................................................................... 16Licence Cancellation ...................................................................................................................................... 16Licence Revocation ........................................................................................................................................ 16Licence Reinstatement ................................................................................................................................... 16Bankruptcy ...................................................................................................................................................... 17Bond Requirements ........................................................................................................................................ 17

Recordkeeping Requirements ........................................................................................................................... 18Record Retention Period ................................................................................................................................ 18Distance Records ........................................................................................................................................... 18Fuel Records .................................................................................................................................................. 18Bulk Fuel Storage ........................................................................................................................................... 19Decal Inventory Log........................................................................................................................................ 19Records to Support Non-taxable Distance ..................................................................................................... 19

Audits ................................................................................................................................................................... 20Audit Approach and Standards ....................................................................................................................... 20Audit Communications.................................................................................................................................... 20Non-Compliant Record ................................................................................................................................... 20Audit Results .................................................................................................................................................. 20

Appeals ................................................................................................................................................................ 2130-Day Objection Period ................................................................................................................................ 21Decision on Your Objection ............................................................................................................................ 21

Glossary ............................................................................................................................................................... 22Appendix A: IFTA Member Jurisdictions ........................................................................................................... 24Appendix B: Samples of IFTA Forms/Schedules and Tax Returns for Ontario ............................................. 25

Interjurisdictional Carrier’s Manual

The International Fuel Tax Agreement (IFTA) is an agreement among the 10 provinces inCanada and 48 states in the United States of America that simplifies the reporting byinterjurisdictional carriers (IJCs) of motor fuel use taxes. The Agreement allows IJCs,operating qualified motor vehicle(s), to report and pay taxes owing to all jurisdictions to asingle base jurisdiction.

Note: Northwest Territories, Nunavut, Yukon, Hawaii, Alaska and the District ofColumbia are not member jurisdictions.

The International Fuel Tax Association, Inc. (IFTA, Inc.) oversees the activitiesnecessary to administer IFTA on behalf of the member jurisdictions. Information aboutIFTA, including the governing documents and the quarterly IFTA tax rate matrices can befound at the IFTA, Inc. website.

Under IFTA, IJCs are required to account for and remit to jurisdictions based on the fuelconsumed and the proportion of distance travelled in each jurisdiction.

You must meet all of the following criteria to register in Ontario:

$ your qualified motor vehicle(s) are registered in Ontario$ you have an established place of business in Ontario from which you maintain

operational control of your qualified motor vehicle(s) and you keep records foryour qualified motor vehicle(s) in Ontario, or will make your records available toany official of the Ministry of Revenue (ministry) in Ontario, and

$ your qualified motor vehicle(s) travel in Ontario and at least one other IFTAjurisdiction.

If you qualify for IFTA registration but do not wish to participate in the program, you mustobtain single trip permit(s) to travel interjurisdictionally. Information on single trip permitsmay be obtained by contacting the ministry at the phone numbers listed on the insidecover.

If you travel through jurisdictions which are not members of IFTA, you must satisfy anymotor fuel use taxes in accordance with the laws of those non-IFTA jurisdictions.

A qualified motor vehicle includes a motor vehicle that is used, designed or maintainedto transport persons or property (does not include recreational vehicles), and has:

• two axles and a gross vehicle or registered gross vehicle weight of more than11,797 kg (26,000 pounds), or

• three or more axles on the power unit, regardless of weight, or• a total gross vehicle or registered gross vehicle weight of more than 11,797 kg

when used in combination.

What is IFTA?

INTRODUCTION

Who is Eligibleto RegisterUnder IFTA?

What is aQualified MotorVehicle?

http://www.iftach.org/


Recreational vehicles, regardless of weight or axle configuration, when not used inconnection with any business endeavour, are not considered qualified motor vehicles.Recreational vehicles include motor homes, pickup trucks with attached campers, andbuses when used exclusively for personal pleasure by an individual.

Light trucks and vans with a gross vehicle or registered gross weight (including trailerweight, if any) equal to or below 11,797 kg (26,000 pounds) are not required to registerunder IFTA, even if they are being used for commercial transportation of goods orpassengers inside and outside Ontario. Generally, these vehicles include delivery vans,service vehicles and pickup trucks used by local merchants, short haul carriers, inter-city carriers and courier services.

Ministry inspectors monitor interjurisdictional truck traffic forcompliance with registration requirements under IFTA.Vehicles registered under IFTA are identified by IFTA decals.Infractions carry a fine of $430 (fine, victim fine surchargeand costs) for the first offence, and provide audit leads for theministry and other jurisdictions.

Inspectors may also sample the fuel tanks of diesel vehiclesunder the Coloured Fuel program to identify operators whomay be avoiding fuel tax of 14.3 cents per litre by usingfurnace oil or similar tax-exempt fuel, to power their vehicle.

Tax-exempt fuel is coloured with red dye to aid its detection. Infractions carry a fine of$430 (fine, victim fine surcharge and costs) for a first offence and assessment of anyfuel tax evaded in the previous four years, plus penalty and interest.

To apply for your IFTA licence and decals, submit a completed Application for IFTARegistration – IFTA 401 form and the required decal fee payment of $10 per set to ouroffice. You can obtain an application form by contacting the ministry at any of the phonenumbers listed on the inside cover.

What is aQualified MotorVehicle? (cont’d)

Enforcement


On the application, you must provide basic information about your business, yourinterjurisdictional operation and the number of decals you need during the registrationyear. Also include the Federal Business Number (BN) of your business. Failure toprovide the required information or the decal fee payment may result in a delay inprocessing your application. Once your application is approved, your licence and decalswill be mailed to the mailing address on your application.

If you have an agent who will be acting on your behalf to deal with the ministry regardingyour IFTA account, you must complete section ‘L’ of the application Agent’s Directionand Authorization.

If, after applying for your licence, you decide to have an agent act on your behalf or wishto cancel an agent authorization, you must complete an Authorizing or Cancelling aRepresentative form.

If you change your address, you must notify the ministry immediately. You may use theministry’s Change of Address form. As well, if you change the name of the IJC, thenature of the business of the IJC or terminate the business of the IJC, you must notifythe ministry immediately at:

Ministry of RevenueIFTA Program33 King Street WestPO Box 625Oshawa ON L1H 8H9

If your licence is revoked in another IFTA member jurisdiction, you will not be eligible toregister in Ontario.

When you register in Ontario under IFTA you will:

$ receive two decals for each qualified motor vehicle, and a single IFTA licence,which will allow you to travel in all IFTA member jurisdictions

$ file quarterly fuel tax returns only with Ontario, your base jurisdiction, to reportyour operations for all fuel types in each of the IFTA member jurisdictions

$ calculate one tax due or credit owing by netting a motor fuel tax overpayment inone jurisdiction against a liability in another jurisdiction on your return. If the netresult is an underpayment, you will remit one cheque to Ontario. If the net resultis an overpayment, you will receive one refund from Ontario

$ maintain records to substantiate information reported on the tax returns, and$ be subject to tax audits for all fuel types for your travel in all IFTA member

jurisdictions.

REGISTRATION AND RENEWAL PROCEDURES

Initial Applicationfor Licence

http://www.rev.gov.on.ca/english/forms/ltt/pdf/3252.pdf

http://www.rev.gov.on.ca/english/forms/ltt/pdf/3252.pdf

http://www.rev.gov.on.ca/english/forms/changeaddress.html


If you are based in an IFTA jurisdiction outside Ontario, a valid IFTA licence and decalsissued from your base jurisdiction will meet Ontario’s fuel use tax licensingrequirements.

If you are an IJC and elect to not license under IFTA, you must obtain single trip permitsfor each trip and for each jurisdiction you intend to travel, including Ontario. Informationon single trip permits may be obtained by contacting the ministry at the phone numberslisted on the inside cover.

If you are based in and travel only in Ontario, no IFTA licence or reporting is required.

The ministry will issue a single IFTA licence for your fleet of vehicles, valid for onecalendar year (January 1 through December 31). Copies of the original licence must beplaced in each of your qualified motor vehicles. The original licence should be kept withyour business records, so that additional copies can be made when adding a qualifiedmotor vehicle to your fleet during the registration year. If you are found operating aqualified motor vehicle without an IFTA licence or without a valid trip permit, you willreceive a fine and will be required to purchase a trip permit.

Sample IFTA Licence

You will receive two decals for each qualified motor vehicle in your fleet. IFTA decals arevalid for one calendar year (January 1 through December 31). The decals must beaffixed to the outside of each qualified motor vehicle, one on either side of the cab.However, if you are a manufacturer, dealer or transporter (includes drive-awayoperators) of qualified motor vehicles the decals need not be permanently affixed, butmay be temporarily displayed in a visible manner on both sides of the cab.

When you renew your credentials, you may operate with the new IFTA decals andlicence up to one month (December 1st) prior to the effective date shown on thecredentials. Carriers must have the current and renewed licence available until theeffective date of the new licence.

If you do not display the IFTA decals properly, you will receive a fine and will be requiredto purchase a single trip permit. You cannot transfer decals between vehicles.

During the registration year, you may purchase decals for any qualified motor vehicle youadd to your fleet by submitting the Request for Additional Decals - IFTA 421 form that youreceived with your IFTA credentials. A sample of this form is shown on page 25. Youmay submit this request by mail or in person, at the address listed on the inside cover.

Initial Applicationfor Licence(cont’d)

IFTA Licence

IFTA Decals

Additional IFTADecals


A decal fee of $10 per set is charged for each pair of IFTA decals that you order. Thedecal fee is printed on all application forms. The required decal fees must be paid beforethe ministry can issue your decals and should be made payable to the Minister ofFinance. Payments cannot be made at financial institutions.

Your IFTA licence and decals must be renewed each year. At least 30 days before yourIFTA licence expires, you will receive the Annual Renewal Request for IFTA Decals - IFTA407 form. This application form must be completed and returned beforeDecember 31 each year to renew your IFTA licence and decals. This form must bereturned with your decal fee payment to the ministry. Please refer to the mailing addresslisted on the inside cover.

Your renewal licence and decals will be issued after your account has been screened forcompliance with all Ontario IFTA requirements. We cannot issue a renewal licence anddecals if:

$ your account has been cancelled or revoked$ you have failed to file a fuel tax return$ you have failed to remit any payments to Ontario to cover the liability for all

IFTA-member jurisdictions$ you have shown no interjurisdictional operations over the last year, or$ you are not compliant with all ministry tax programs.

If you are renewing your IFTA licence and decals, you are allowed a two-month graceperiod to display the renewed IFTA licence and decals (credentials). If you have appliedfor, but not received your renewed IFTA credentials by January 1 of the licence period,you will need to continue to display your previous IFTA licence and decals until youreceive your renewed IFTA credentials.

Under IFTA, there may be situations where IJCs are under contract agreements or leaseagreements. These agreements should detail which party, the owner of the vehicle orthe carrier, is responsible for fuel tax reporting. These agreements need to specificallydefine the period the agreement covers. Keep a copy of the contract or rentalagreement with your records indicating the party responsible for paying and reportingfuel taxes.

The following rules apply in determining who is responsible for reporting and paying fueltaxes:

Rental/Leasing CompaniesRental/Leasing Companies (Lessors) are companies which rent out a qualified motorvehicle, without a driver. The leases are either short term (29 days or less) or long term(30 days or more).

Short Term LeasesIn the case of a short term motor vehicle lease, the lessor (Rental/LeasingCompany) will report fuel usage unless the following two conditions are met:$ the lessor has a written rental contract which designates the lessee as the party

responsible for reporting and paying the fuel tax, and$ the lessor has a copy of the lessee’s IFTA fuel tax licence which is valid for the

term of the rental.

Decal Fees

Annual LicenceRenewal

ContractAgreements


Long Term LeasesIn the case of a long term motor vehicle lease, the lessee is responsible for reportingand paying the fuel use tax. However, the lessor may apply to the ministry to bedeemed the licensee and, if approved, the lessor will be responsible for reporting andpaying the fuel use tax.

Independent Contractors (Owner/Operators)

Independent Contractors differ from Rental/Leasing Companies in that they rent out boththe qualified motor vehicle and the driver. The leases for Independent Contractors areeither short term (29 days or less) or long term (30 days or more).

Short Term LeasesIn the case of short term leases, the lessor (independent contractor, agent or servicerepresentative) reports and pays all fuel taxes.

Long Term LeasesIn the case of long term leases, the lessee is responsible for reporting and payingfuel tax unless a written contract stipulates that the lessor (independent contractor,agent or service representative) will be responsible.

Household Goods Carriers

Household Goods Carriers (commonly known as ‘moving companies’) have separaterules from the above when under intermittent leases. These separate rules coversituations where a moving company hires a subcontractor to move household goods toanother jurisdiction. The lessee (household goods carrier) is responsible for reportingand paying fuel tax when the qualified motor vehicle is being operated under thelessee’s jurisdictional operating authority. The lessor (independent contractor) isresponsible for reporting and paying fuel tax when the qualified motor vehicle isoperated under the lessor’s jurisdictional operating authority.

As an example, a moving company is hired to move household goods from Toronto toCalgary. The moving company then hires an independent contractor to move thehousehold goods. The moving company (lessee) is responsible for reporting and payingfuel taxes, as the vehicle is operated under its authority. Once the goods are deliveredto Calgary, the trip back by the independent contractor is under the independentcontractor’s authority, unless it rents out its qualified motor vehicle and driver to anothermoving company. The responsible party on the trip back will be the lessor (independentcontractor) if the motor vehicle comes back empty or the independent contractorarranges for its own haul. However, if the independent contractor is hired by anothermoving company on the return trip, that moving company is responsible for reportingand paying the fuel tax.

Bus Companies Based in Ontario

Bus companies are required to report and pay fuel tax just as any other IJC based inOntario.

Contractagreements(cont’d)


The ministry will send a fuel tax return to you at least 30 days before each due date(see due dates on page 11).

Reporting One Fuel Type

If you told the ministry that you use only one type of fuel to power your qualified motorvehicles, you will receive an IFTA Quarterly Tax Return - IFTA 501 form accompanied bythe corresponding guide. See sample of form on page 27.

Reporting More Than One Fuel Type

If you told the ministry that you use more than one type of fuel to power your qualifiedmotor vehicles, you will receive a tax return which includes an IFTA Quarterly Tax ReturnSummary - IFTA 503 form and one IFTA Quarterly Fuel Schedule - IFTA 511 for each fueltype accompanied by the corresponding guide. Schedules must be filed for each fueltype. See sample forms on pages 29 and 30.

Reporting Requirements

Once you obtain decals and put them on your qualified motor vehicle(s), you arerequired to report all travel of the vehicle(s) on your IFTA return for as long as the IFTAdecals are in effect. You are not permitted to exclude the travel on a fluctuating basiswithin the same year.

If your operations change during the year, please notify the ministry so that you will bemailed the appropriate fuel tax return and schedules. If you do not receive your fuel taxreturn form, it remains your responsibility to file a return by the due date. Please contactthe ministry if you do not receive the fuel tax return so that one may be sent to you.

You must file a complete fuel tax return each quarter even if you did not operate yourvehicles in any IFTA jurisdiction or purchase any taxable fuel during the quarter.A complete fuel tax return includes:

$ the IFTA 501 form with both back and front completed, or$ the IFTA 503 form and one IFTA 511 schedule for each fuel type used by your

qualified motor vehicles during the quarter, and$ payment for any taxes due.

A guide with detailed instructions for completing IFTA 501, 503 and 511 forms isprovided with the forms.

REPORTING REQUIREMENTS

Quarterly FuelTax Returns


Non-Standard Returns

Prior approval is required if you use self-created or software-produced versions of theIFTA schedules which must provide a facsimile of the IFTA schedule. You must send acopy of your form to the Ministry of Revenue for approval to ensure it meets all of therequirements before you can use your own version.

Note: Fuel and distance must be reported on the fuel tax return in litresand kilometres.

If you need to correct a prior fuel tax return, please contact the ministry for a blankreturn for that reporting period.

1. Check the box marked ‘Amended Return’ on your fuel tax return.2. Ensure the reporting period dates reflect the period you are correcting.3. Fully complete the return with the correct information.4. Sign and date the return.

Quarterly fuel tax returns must be postmarked or hand delivered by the due date shownon the top of every fuel tax return. If the due date falls on a Saturday, Sunday or astatutory holiday, the next business day is the due date. The reporting quarters and duedates are:

IFTA Reporting Quarter Return Due Date

1st Quarter - January to March April 302nd Quarter - April to June July 313rd Quarter - July to September October 314th Quarter - October to December January 31

If your fuel tax return is late or full payment is not received, you will be subject to penaltyand interest provisions. Failure to file a return with the ministry may result in yourlicence being revoked.

You must report fuel usage and distance travelled in kilometres and litres. Pleaseconvert gallons to litres and miles to kilometres by using the following table. Round yourtotals to the nearest whole litre or kilometre.

Conversion Table

1 litre 0.2642 US gallons1 US gallon 3.785 litres1 mile 1.6093 kilometres1 kilometre 0.62137 miles

AmendedReturns

Due Dates

Measurementsfor Fuel TaxReporting


IFTA requires that you report both ‘total kilometres’ and ‘taxable kilometres’ when filing taxreturns. On your returns:

$ Include amounts for all distance travelled (both taxable and non-taxabledistance), as well as all fuel placed in the supply tank (both taxable and non-taxable fuel), when calculating your ‘kilometres per litres’ (KPL) for each fueltype. See explanation of ‘non-taxable fuel use’ below, and

$ Use the following formula to calculate the taxable kilometres for each jurisdictionin which you are claiming non-taxable distance.

Taxable kilometres = total kilometres per jurisdictionminusnon-taxable kilometres per jurisdiction.

Note: All jurisdictions require documentation to support a claim ofnon-taxable distance.

Non-taxable distance, which includes vehicle exemptions and distance exemptions, isallowed when your vehicle(s) qualify for an exemption that is provided by an IFTAjurisdiction. For example, some jurisdictions allow non-taxable distance for travel on atoll highway or travel by a school bus. To see distance and vehicle exemptions for eachjurisdiction, refer to the Exemption Database on the IFTA website.

On your IFTA tax return, you must report all fuel placed in the supply tank of your qualifiedmotor vehicles as taxable. Some IFTA jurisdictions provide a refund of the tax paid ontax exempt fuel. To see fuel exemptions for each jurisdiction, refer to the ExemptionDatabase on the IFTA website. To claim a refund, you must submit your claim directly toeach jurisdiction for tax paid on tax exempt fuel You must maintain adequate records tosupport any refund claims and contact the jurisdiction(s) to obtain information for anynon-taxable fuel use in those jurisdictions.

Refund claims submitted to Ontario for tax paid on biodiesel by IFTA licensed carriersare limited by the proportion of distance travelled in Ontario to the total distancetravelled during the claim period, whether or not the claimant has purchased fuel inOntario. IFTA licensed carriers are required to submit the Application for Refund: ClearFuel Schedule 21 – TEU and Claim Summary with a copy of their IFTA Quarterly TaxReturn for the period(s) covered in the refund claim, along with the CalculationWorksheet for Biodiesel Refund showing the applicant’s calculation of the amount ofbiodiesel consumed.

Refund claims submitted to Ontario for tax paid on fuel used in auxiliary equipment(power take-off) are limited by the proportion of distance travelled in Ontario to the totaldistance travelled during the claim period, whether or not the claimant has purchasedfuel in Ontario. Contact the ministry for the appropriate forms for claiming a refund. Donot claim a refund for power take-off on the regular IFTA tax returns.

More information can be found in Tax Bulletin FT/GT 4-2000 Power Take-Off Refunds forInterjurisdictional Carriers Licenced under the International Fuel Tax Agreement or bycalling the ministry at 1 800 263-7775.

CalculatingKilometresper Litre

Non-taxableDistance

Non-taxableFuel Use(Tax ExemptFuel)

1. Biodiesel

2. Power TakeOff (PTO)



http://www.rev.gov.on.ca/english/bulletins/ft/fuelgas4_2000.html

http://www.rev.gov.on.ca/english/bulletins/ft/fuelgas4_2000.html


When completing your fuel tax return, calculate your net tax due or credit claimed for thisperiod by netting the tax due or credit amounts calculated for each jurisdiction in whichyou travelled for the reporting period. If the net result is tax due, you will need to send acheque to Ontario for the net tax due amount. If the net result is a credit claim, Ontariowill refund the credit amount. Please note, if your tax balance owing is lessthan ten dollars, payment is not required and only credits larger than $10 will be mailedto clients.

The IFTA Tax Rates - IFTA 521 form included with your return lists the current tax ratesand surcharge rates for each IFTA member jurisdiction for that reporting quarter. Thetax rates have been converted to Canadian currency. You can not use old tax ratetables, as each quarter the tables are updated. The ministry will inform you of changesin tax rates and IFTA procedures. Access to the most recent IFTA NewsFlash isavailable on our website. The quarterly IFTA tax rate matrices can be found at the IFTAwebsite.

All tax payments and decal fee payments should be made payable to the Minister ofFinance and mailed to:

Ministry of RevenueIFTA Program33 King Street WestPO Box 620Oshawa ON L1H 8H5

Note: Payments cannot be made at financial institutions.

When cheques are returned by any financial institution, the ministry may assess a non-negotiable cheque fee and will hold any refund (fuel tax or audit) or will use the refundamount to cover the returned cheque until full payment is received.

Tax Due andCredits

http://www.rev.gov.on.ca/english/notices/ifta/index.html




If you fail to file a complete return IFTA 501 or IFTA 503 and IFTA 511 schedules, you willbe subject to a penalty. A complete return allows the ministry to accurately report andtransmit to each IFTA member jurisdiction.

Failure to pay the fuel taxes assessed by the due date will result in interest and penalty,and your licence may be revoked. If you do not agree with an assessment, you have 30days from the date the assessment was mailed or personally delivered to file a Notice ofObjection with Ontario’s Tax Appeals Branch. The tax owing on an assessment is duedespite an objection being filed. Tax credits pending on your account or any credit froman audit will first be applied to any tax due, interest, or penalty owing from quarterly fueltax returns.

Penalty

The Ministry of Revenue imposes a penalty when:

$ a return is filed late$ full payment for tax due is not received by the due date$ a complete fuel tax return is not filed, or$ an amended return is filed resulting in a substantial increase in tax due from that

reported on the initial return.

The penalty is 5 per cent of the net tax due.

Interest Charges

Interest is charged on tax due to a jurisdiction beginning on the due date of the return. Itis calculated separately for each jurisdiction. If a return and full payment are notreceived by the due date, a full month’s interest accrues for any portion of a month onwhich tax owed remains unpaid. If a return and full payment is not received by the duedate, interest will be charged to the last day of the month in which full payment isreceived.

The interest rate is the Canadian Federal Treasury Bills rate, plus 2 per cent, adjustedevery quarter. The quarterly interest rates can be obtained by contacting the ministry atany of the phone numbers listed on inside cover or by visiting www.rev.gov.on.ca.

FAILURE TO FILE A QUARTERLY FUEL TAX RETURN

Failure to File aComplete FuelTax Return

Failure to PayFuel Taxes

Penalty andInterestProvisions

http://www.rev.gov.on.ca/english/forms/tab/pdf/1406.pdf




Example: If you file your fuel tax return with a full tax payment on August 10,which is 10 days after the due date of July 31, you will be assessed apenalty and interest as shown below. In this example, the interest rateis 5 per cent per annum, and interest is calculated on the full month ofAugust (31 days):

Interest Calculation Penalty Calculation

Tax Due (DR) Interest calculated only Penalty is calculated onCredit (CR) on fuel on tax due amounts; the net tax for the returntax return in this example,

Ontario and Michigan.

Ontario $3,500 DR Ontario interest = $17.84 Penalty = $5,000 x 5%New York (1,000) CR New York interest = $ 0.00 = $250Michigan 2,500 DR Michigan = $12.74Net taxes $5,000 DR Total Interest = $30.58

Assessment amount = interest + penalty= $ 30.58 + $250.00= $ 280.58

If you fail to file your fuel tax return(s), the ministry will estimate your tax liability for eachmember jurisdiction based upon the information available to the ministry. Your past filinghistory, or a minimum amount as determined by the ministry, will be used for this taxassessment (including interest and penalty). The ministry may require you to post abond if you fail to file your tax returns.

In these circumstances, it is your responsibility to prove that the ministry’s assessmentis incorrect. We suggest you file the required tax return for the period of the assessmentso that the ministry can review the assessment.

Failure to FileFuel Tax Returns


You may cancel your IFTA licence when you are no longer operating qualified motorvehicles interjurisdictionally or you prefer to acquire single trip permits forinterjurisdictional travel. If you wish to cancel your IFTA licence, check the appropriatebox in the top right-hand corner of the IFTA Quarterly Tax Return – IFTA 501/503 andenter the last date of business.

The ministry may cancel your IFTA licence if you choose not to renew your IFTA licenceor you report no interjurisdictional operations over the last year.

An IFTA licence will only be cancelled if the licensee has complied with IFTA, filed all taxreturns, and has paid all taxes, penalties and interest due. If an IFTA licence iscancelled, the original licence and any copies, and all decals must be destroyed.

The Ministry of Revenue has the discretion to conduct a final audit of your records afteryour IFTA account is closed. You must keep all records on which the quarterly taxreturns are based for four years from the return due date or filing date, whichever islater. The ministry will notify all IFTA member jurisdictions of your cancellation.

To reactivate your cancelled account, you must submit a new application form, pay therequired decal fees, provide your cancelled IFTA account number and a letter requestingreactivation.

The ministry may revoke your IFTA licence, if you fail to:

$ file complete quarterly returns on time$ pay taxes in full, or$ follow the ministry’s record-keeping requirements.

A licence may also be revoked for an outstanding audit assessment or for failure tocomply with any other requirements. A notice of revocation will be mailed to the mailingaddress listed on your application. The ministry will notify all IFTA member jurisdictionsof your licence revocation.

For any interjurisdictional travel made while your licence is revoked, you must obtainsingle trip permits for each trip and for each jurisdiction you intend to travel, includingOntario.

LICENCE CANCELLATION, REVOCATION AND REINSTATEMENT

LicenceCancellation

LicenceRevocation


To reinstate your revoked IFTA licence, you must satisfy the requirements which resultedin the revocation and make all required payments. This includes payment of all taxes,penalties and interest, filing of all returns, and the request for all records made by theministry.

You will be required to complete a new application and pay the required decal fees toreactivate your account. The ministry may require that you post a bond to satisfy anypotential liabilities to all member jurisdictions. The ministry will notify all IFTA memberjurisdictions of your reinstatement.

If you file for bankruptcy, please contact:Ministry of RevenueIFTA Program33 King Street WestPO Box 625Oshawa ON L1H 8H9

IFTA registrants are not normally required to post a bond with Ontario. However, you maybe required to post a bond for failing to file fuel tax returns, pay taxes, penalties orinterest in the time allowed, or if an audit reveals that a guarantee is necessary toprotect the interests of IFTA member jurisdictions. You may also be required to post abond if a cheque is returned by your banking institution.

LicenceReinstatement

Bankruptcy

BondRequirements


You must maintain records to prove that the information reported on your fuel tax returnis accurate. You must keep these records for four years from the return due date or filingdate, whichever is later. You may keep the records on paper, microfilm, microfiche, orcomputerized storage system. You must be able to provide these records in a formacceptable to the ministry.

You must maintain distance records which show operations on an individual vehiclebasis. This includes proof of taxable and non-taxable fuel use and taxable and non-taxable distance travelled. A trip report is an acceptable source document.

The records must include:$ start and end dates of a trip$ point of origin and the destination$ list of highways used when leaving and entering a jurisdiction$ odometer or hubodometer readings at the beginning and end of each trip, as well

as at each jurisdiction’s borders$ total trip distance$ distance travelled in each jurisdiction (odometer or hubodometer readings at

jurisdiction line)$ power unit number or vehicle identification number (VIN)$ fleet number or unit number of vehicle$ name of the registrant, and$ total trip distance.

You must keep a complete record of all fuel purchased, received, and used in theoperation of your vehicles. This includes proof of taxable and non-taxable fuel use.Separate totals must be calculated for each fuel type.

All original fuel receipts or invoices must include:

$ date of fuel purchase$ seller’s name and address$ number of litres purchased$ fuel tax paid on number of litres$ type of fuel$ price per litre or total amount of fuel sale$ unit numbers of the vehicles in which the fuel was placed$ purchaser’s name - for contract or rental agreement, receipts will be accepted

as long as the name on the contract provides a legal connection to the reportingparty, and

$ amount of fuel purchased while travelling under a single trip permit - you arerequired to keep a copy of your single trip permit.

RECORDKEEPING REQUIREMENTS

RecordRetentionPeriod

DistanceRecords

Fuel Records


Keep a copy of the contract agreement indicating the party responsible for reporting andpaying the motor fuel use taxes. Refer to section Contract Agreements on page 8 fordetails on who is responsible for reporting.

Acceptable fuel receipts include an invoice, credit card receipt, microfilm/microfiche ofthe original invoice, automated vendor-generated invoices or transaction listings.Supplier’s statements are not acceptable fuel receipts. Altered receipts will not beaccepted.

If you own, lease or control a bulk storage facility, you may obtain credit for any tax paidon the fuel withdrawn from that storage facility and placed into the fuel tank of aqualified motor vehicle. You may claim the credit against the jurisdiction in which youpurchased the bulk fuel and paid fuel tax.

All invoices for bulk fuel purchases must be kept and your records must distinguishbetween fuel placed in qualified motor vehicles and non-qualified motor vehicles (suchas cars, pickup trucks, small trucks, recreation vehicles or non-highway vehicles such asconstruction equipment and unlicenced farm vehicles) and third party sales. Therecords must show non-highway vehicles, such as construction equipment and farmvehicles, using bulk fuel.

Your records must contain the following information:

$ date of withdrawal$ number of litres withdrawn$ fuel type$ unit number of the vehicle in which the fuel was placed$ purchase and inventory records to substantiate that tax was paid on all bulk

purchases, and$ location of the bulk storage facility.

A record should be maintained identifying IFTA decals assigned to an IFTA qualified unit.

Keep appropriate records to support non-taxable distance travelled which you haveclaimed on your fuel tax return.

Fuel Records(cont’d)

Bulk FuelStorage

DecalInventory Log

Records toSupport Non-taxableDistance


Tax audits for all fuel types will be conducted by Ontario on behalf of Ontario and all IFTAmember jurisdictions in which your qualified motor vehicles travelled.

When you are selected for an audit, the ministry will contact you in advance to schedulethe audit at a mutually convenient time. The ministry will advise you of the time period tobe audited and the records to be reviewed. The ministry will conduct the audit on behalfof all jurisdictions in which your qualified motor vehicles have travelled. If you do notkeep your records in Ontario and the ministry must send its auditor to another jurisdiction,you (or your company) will be required to pay all travel expenses connected with youraudit. Ontario’s audits conform to the standards documented in the IFTA Audit Manual.

At the beginning of the audit, the auditor will meet with you to discuss such topics as youroperation, audit procedures, records to be examined and the ministry’s samplingmethodology. Upon completion of the audit, the auditor will discuss the preliminaryfindings with you and recommend how to improve or simplify your record-keeping.

If your records are non-compliant or lacking sufficient detail to support the informationfiled on your returns or to determine your tax liability, the auditor may take one or more ofthe following actions:

$ estimate your distance travelled and fuel consumption based on your reportinghistory or the history of a similar operation

$ apply a standard average 1.7 KPL (diesel) or 1.2 KPL (gasoline) or 1.0 KPL(propane) in calculating your tax liability, or

$ not allow your unsupported claims for exemptions and tax paid purchases.

Note: Failure to keep proper records may result in revocation of yourIFTA licence.

The ministry will send you its audit findings which will address the completeness andaccuracy of your records, including any areas where you need to take corrective action.

The ministry will send the audit results to the IFTA jurisdictions in which your qualifiedmotor vehicles travelled. If the ministry’s auditor finds that you owe taxes to any memberjurisdiction, you are required to pay the tax, penalty and interest owed directly to theministry. The ministry will distribute your payment to each member jurisdiction. If theministry finds that an IFTA jurisdiction owes you money, the ministry will credit youraccount for the amount owed to you by the other IFTA jurisdiction.

Audits are completed by Ontario’s auditors; however, representatives of other IFTAmember jurisdictions may join the audit if they wish. If another IFTA member jurisdictionchooses to re-audit the ministry’s findings, the auditors of the member jurisdiction mustuse the same sample period used during the original audit and conduct the re-audit incooperation with Ontario’s auditors.

AUDITS

Audit Approachand Standards

AuditCommunications

Non-CompliantRecord

Audit Results


You may object to any action or audit finding by filing a Notice of Objection form withOntario’s Tax Appeals Branch:

Ministry of RevenueTax Appeals Branch1600 Champlain AvenueWhitby ON L1N 9B2

You can obtain an objection form by visiting our website at www.rev.gov.on.ca. You mayalso contact the ministry at any of the phone numbers listed on the inside cover.

Your objection must be filed within 30 days of the date of the original action or finding.If you do not file your objection within 30 days, the action or finding is final. You areobligated to pay all amounts due even if the decision on your objection is outstanding.

The Tax Appeals Branch will provide you with its findings and decision on your objection.If the dispute involves an audit and you continue to disagree with the decision, you mayrequest each jurisdiction in which you operate to audit your records. However, thejurisdiction may deny the request. Jurisdiction(s) that agree to audit your records willaudit only the information involving your operations within their jurisdiction. You will beresponsible for all costs related to these audits.

APPEALS

30- DayObjection Period

Decision on YourObjection




Auxiliary Equipment

Equipment of a motor vehicle which is powered by motor fuel from the vehicle’s fueltank, but which is not used to propel the vehicle. Under certain circumstances, theoperator may claim a Power Take-off refund for tax paid on the fuel used in theauxiliary equipment.

Base Jurisdiction

The jurisdiction where qualified motor vehicles are based for vehicle registrationpurposes, where the operational control and operational records of the licensee’squalified motor vehicles are maintained or can be made available, and where sometravel is accrued by qualified motor vehicles within the fleet.

Federal Business Number (BN)

The Federal Business Number is a common identifier used in Canada which allowsbusinesses to simplify their dealings with all levels of the public sector and each other.

To register a business for a business number, contact:Canada Revenue Agency1 800 959-5525www.cra-arc.gc.ca

Hubodometer

The meter on the wheel of a tractor used to record mileage.

IFTA

International Fuel Tax Agreement

IFTA, Inc.

International Fuel Tax Association, Inc.IFTA, Inc. was formed to assist its member jurisdictions in the administration of theInternational Fuel Tax Agreement.

IJC

Interjurisdictional Carrier

Ministry

Ontario Ministry of Revenue

GLOSSARY

http://www.cra-arc.gc.ca/


Non-taxable Distance

Kilometres travelled that are not subject to the motor fuels use tax. Also kilometrestravelled by an exempt vehicle. Each jurisdiction has its own unique definition of non-taxable kilometres. Non-taxable kilometres includes distance travelled in non-memberjurisdictions, any non-taxable kilometres allowed by a jurisdiction, and travel during avalid period of a single trip permit. Please Note: All jurisdictions require documentationto support a claim of tax exempt kilometres. Ontario does not have tax exemptkilometres or vehicles.

Qualified Motor Vehicle

A motor vehicle used, designed, or maintained for transportation of persons or property,not including recreational vehicles, and:

$ having two axles and a gross vehicle weight or registered gross vehicle weightexceeding 26,000 pounds or 11,797 kilograms, or

$ having three or more axles regardless of weight, or$ is used in combination, when the weight of such combination exceeds 26,000

pounds or 11,797 kilograms gross vehicle or registered gross vehicle weight.

Recreational Vehicles

Vehicles such as motor homes, pickup trucks with attached campers, and buses whenused exclusively for personal pleasure by an individual. In order to qualify as arecreational vehicle, the vehicle shall not be used in connection with any businessendeavour.

Single Trip Permit

A permit that allows conditional travel in a jurisdiction. Single trip permits may bepurchased from authorized permit agents on a trip-by-trip basis. Single trip permits mayinclude fees for registration, weight distance tax, fuels tax, other elements, or acombination of these. A trip permit expires when you leave a jurisdiction or at the end ofa specified time period. Information on single trip permits may be obtained by contactingthe ministry at the phone numbers listed on the inside cover.

GLOSSARY (cont’d)


IFTA Member Jurisdictions

Canadian Provinces

AB AlbertaBC British ColumbiaMB ManitobaNB New BrunswickNL NewfoundlandNS Nova ScotiaON OntarioPE Prince Edward IslandQC QuebecSK Saskatchewan

United States

AL Alabama ME Maine OH OhioAR Arkansas MD Maryland OK OklahomaAZ Arizona MA Massachusetts OR OregonCA California MI Michigan PA PennsylvaniaCO Colorado MN Minnesota RI Rhode IslandCT Connecticut MS Mississippi SC South CarolinaDE Delaware MO Missouri SD South DakotaFL Florida MT Montana TN TennesseeGA Georgia NE Nebraska TX TexasIA Iowa NV Nevada UT UtahID Idaho NH New Hampshire VT VermontIL Illinois NJ New Jersey VA VirginiaIN Indiana NM New Mexico WA WashingtonKS Kansas NY New York WI WisconsinKY Kentucky NC North Carolina WV West VirginiaLA Louisiana ND North Dakota WY Wyoming

APPENDIX A


APPENDIX B - SAMPLE FORMS

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