INTERJURISDICTIONAL CARRIER S MANUAL

Transcription

1 SEPTEMBER 2007 INTERJURISDICTIONAL CARRIER S MANUAL INTERNATIONAL FUEL TAX AGREEMENT (IFTA) MINISTRY OF REVENUE

2 FURTHER INFORMATION ABOUT IFTA Ministry of Revenue Telephone Numbers Canada and the U.S. (toll free) Services en français (numéro sans frais) Other Locations (long distance) TTY (Teletypewriter) Fax Numbers Ministry of Revenue, Client Accounts & Services Branch INTERJURISDICTIONAL CARRIER S MANUAL This publication provides information about the International Fuel Tax Agreement (IFTA) program and outlines the requirements and responsibilities of a licensee. The information in this publication does not replace the law 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 Revenue Revenue Operations and Client Accounts and Services Branch Client Services Branch IFTA Program 33 King Street West 33 King Street West PO Box 620 PO Box 625 Oshawa ON L1H 8H5 Oshawa ON L1H 8H9 This publication and various English and French tax materials published by the Ministry of Revenue may be obtained online at

3 TABLE OF CONTENTS Introduction... 4 What is IFTA?... 4 Who is Eligible to Register Under IFTA?... 4 What is a Qualified Motor Vehicle?... 4 Enforcement... 5 Registration and Renewal Procedures... 6 Initial Application for Licence... 6 IFTA Licence... 7 IFTA Decals... 7 Additional IFTA Decals... 7 Decal Fees... 7 Annual Licence Renewal... 8 Contract Agreements... 8 Reporting Requirements Quarterly Fuel Tax Returns Amended Returns Due Dates Measurements for Fuel Tax Reporting Calculating Kilometres per Litre Non-taxable Distance Non-taxable Fuel Use (Tax Exempt Fuel) Biodiesel Power Take Off (PTO) Tax Due and Credits Failure to File a Quarterly Fuel Tax Return Failure to File a Complete Fuel Tax Return Failure to Pay Fuel Taxes Penalty and Interest Provisions Failure to File Fuel Tax Returns Licence Cancellation, Revocation and Reinstatement Licence Cancellation Licence Revocation Licence Reinstatement Bankruptcy Bond Requirements Recordkeeping Requirements Record Retention Period Distance Records Fuel Records Bulk Fuel Storage Decal Inventory Log Records to Support Non-taxable Distance Audits Audit Approach and Standards Audit Communications Non-Compliant Record Audit Results Appeals Day Objection Period Decision on Your Objection Glossary Appendix A: IFTA Member Jurisdictions Appendix B: Samples of IFTA Forms/Schedules and Tax Returns for Ontario... 25

4 INTRODUCTION What is IFTA? The International Fuel Tax Agreement (IFTA) is an agreement among the 10 provinces in Canada and 48 states in the United States of America that simplifies the reporting by interjurisdictional 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 a single base jurisdiction. Note: Northwest Territories, Nunavut, Yukon, Hawaii, Alaska and the District of Columbia are not member jurisdictions. The International Fuel Tax Association, Inc. (IFTA, Inc.) oversees the activities necessary to administer IFTA on behalf of the member jurisdictions. Information about IFTA, including the governing documents and the quarterly IFTA tax rate matrices can be found at the IFTA, Inc. website. Under IFTA, IJCs are required to account for and remit to jurisdictions based on the fuel consumed and the proportion of distance travelled in each jurisdiction. Who is Eligible to Register Under IFTA? 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 for your qualified motor vehicle(s) in Ontario, or will make your records available to any official of the Ministry of Revenue (ministry) in Ontario, and $ your qualified motor vehicle(s) travel in Ontario and at least one other IFTA jurisdiction. If you qualify for IFTA registration but do not wish to participate in the program, you must obtain single trip permit(s) to travel interjurisdictionally. Information on single trip permits may be obtained by contacting the ministry at the phone numbers listed on the inside cover. If you travel through jurisdictions which are not members of IFTA, you must satisfy any motor fuel use taxes in accordance with the laws of those non-ifta jurisdictions. What is a Qualified Motor Vehicle? A qualified motor vehicle includes a motor vehicle that is used, designed or maintained to transport persons or property (does not include recreational vehicles), and has: two axles and a gross vehicle or registered gross vehicle weight of more than 11,797 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. Page 4 Interjurisdictional Carrier s Manual

5 What is a Qualified Motor Vehicle? (cont d) Recreational vehicles, regardless of weight or axle configuration, when not used in connection with any business endeavour, are not considered qualified motor vehicles. Recreational vehicles include motor homes, pickup trucks with attached campers, and buses when used exclusively for personal pleasure by an individual. Light trucks and vans with a gross vehicle or registered gross weight (including trailer weight, if any) equal to or below 11,797 kg (26,000 pounds) are not required to register under IFTA, even if they are being used for commercial transportation of goods or passengers inside and outside Ontario. Generally, these vehicles include delivery vans, service vehicles and pickup trucks used by local merchants, short haul carriers, intercity carriers and courier services. Enforcement Ministry inspectors monitor interjurisdictional truck traffic for compliance with registration requirements under IFTA. Vehicles registered under IFTA are identified by IFTA decals. Infractions carry a fine of $430 (fine, victim fine surcharge and costs) for the first offence, and provide audit leads for the ministry and other jurisdictions. Inspectors may also sample the fuel tanks of diesel vehicles under the Coloured Fuel program to identify operators who may be avoiding fuel tax of 14.3 cents per litre by using furnace 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 any fuel tax evaded in the previous four years, plus penalty and interest. To apply for your IFTA licence and decals, submit a completed Application for IFTA Registration IFTA 401 form and the required decal fee payment of $10 per set to our office. You can obtain an application form by contacting the ministry at any of the phone numbers listed on the inside cover. Interjurisdictional Carrier s Manual Page 5

6 REGISTRATION AND RENEWAL PROCEDURES Initial Application for Licence On the application, you must provide basic information about your business, your interjurisdictional operation and the number of decals you need during the registration year. Also include the Federal Business Number (BN) of your business. Failure to provide the required information or the decal fee payment may result in a delay in processing your application. Once your application is approved, your licence and decals will 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 regarding your IFTA account, you must complete section L of the application Agent s Direction and Authorization. If, after applying for your licence, you decide to have an agent act on your behalf or wish to cancel an agent authorization, you must complete an Authorizing or Cancelling a Representative form. If you change your address, you must notify the ministry immediately. You may use the ministry s Change of Address form. As well, if you change the name of the IJC, the nature of the business of the IJC or terminate the business of the IJC, you must notify the ministry immediately at: Ministry of Revenue IFTA Program 33 King Street West PO Box 625 Oshawa ON L1H 8H9 If your licence is revoked in another IFTA member jurisdiction, you will not be eligible to register 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 report your 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 in one jurisdiction against a liability in another jurisdiction on your return. If the net result is an underpayment, you will remit one cheque to Ontario. If the net result is 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. Page 6 Interjurisdictional Carrier s Manual

7 Initial Application for Licence (cont d) If you are based in an IFTA jurisdiction outside Ontario, a valid IFTA licence and decals issued from your base jurisdiction will meet Ontario s fuel use tax licensing requirements. If you are an IJC and elect to not license under IFTA, you must obtain single trip permits for each trip and for each jurisdiction you intend to travel, including Ontario. Information on single trip permits may be obtained by contacting the ministry at the phone numbers listed on the inside cover. If you are based in and travel only in Ontario, no IFTA licence or reporting is required. IFTA Licence The ministry will issue a single IFTA licence for your fleet of vehicles, valid for one calendar year (January 1 through December 31). Copies of the original licence must be placed in each of your qualified motor vehicles. The original licence should be kept with your business records, so that additional copies can be made when adding a qualified motor vehicle to your fleet during the registration year. If you are found operating a qualified motor vehicle without an IFTA licence or without a valid trip permit, you will receive a fine and will be required to purchase a trip permit. Sample IFTA Licence IFTA Decals You will receive two decals for each qualified motor vehicle in your fleet. IFTA decals are valid for one calendar year (January 1 through December 31). The decals must be affixed 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-away operators) of qualified motor vehicles the decals need not be permanently affixed, but may 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 and licence up to one month (December 1st) prior to the effective date shown on the credentials. Carriers must have the current and renewed licence available until the effective date of the new licence. If you do not display the IFTA decals properly, you will receive a fine and will be required to purchase a single trip permit. You cannot transfer decals between vehicles. Additional IFTA Decals During the registration year, you may purchase decals for any qualified motor vehicle you add to your fleet by submitting the Request for Additional Decals - IFTA 421 form that you received with your IFTA credentials. A sample of this form is shown on page 25. You may submit this request by mail or in person, at the address listed on the inside cover. Interjurisdictional Carrier s Manual Page 7

8 Decal Fees A decal fee of $10 per set is charged for each pair of IFTA decals that you order. The decal fee is printed on all application forms. The required decal fees must be paid before the ministry can issue your decals and should be made payable to the Minister of Finance. Payments cannot be made at financial institutions. Annual Licence Renewal Your IFTA licence and decals must be renewed each year. At least 30 days before your IFTA licence expires, you will receive the Annual Renewal Request for IFTA Decals - IFTA 407 form. This application form must be completed and returned before December 31 each year to renew your IFTA licence and decals. This form must be returned with your decal fee payment to the ministry. Please refer to the mailing address listed on the inside cover. Your renewal licence and decals will be issued after your account has been screened for compliance with all Ontario IFTA requirements. We cannot issue a renewal licence and decals 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 grace period to display the renewed IFTA licence and decals (credentials). If you have applied for, 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 you receive your renewed IFTA credentials. Contract Agreements Under IFTA, there may be situations where IJCs are under contract agreements or lease agreements. These agreements should detail which party, the owner of the vehicle or the carrier, is responsible for fuel tax reporting. These agreements need to specifically define the period the agreement covers. Keep a copy of the contract or rental agreement with your records indicating the party responsible for paying and reporting fuel taxes. The following rules apply in determining who is responsible for reporting and paying fuel taxes: Rental/Leasing Companies Rental/Leasing Companies (Lessors) are companies which rent out a qualified motor vehicle, without a driver. The leases are either short term (29 days or less) or long term (30 days or more). Short Term Leases In the case of a short term motor vehicle lease, the lessor (Rental/Leasing Company) 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. Page 8 Interjurisdictional Carrier s Manual

9 Contract agreements (cont d) Long Term Leases In the case of a long term motor vehicle lease, the lessee is responsible for reporting and paying the fuel use tax. However, the lessor may apply to the ministry to be deemed the licensee and, if approved, the lessor will be responsible for reporting and paying the fuel use tax. Independent Contractors (Owner/Operators) Independent Contractors differ from Rental/Leasing Companies in that they rent out both the qualified motor vehicle and the driver. The leases for Independent Contractors are either short term (29 days or less) or long term (30 days or more). Short Term Leases In the case of short term leases, the lessor (independent contractor, agent or service representative) reports and pays all fuel taxes. Long Term Leases In the case of long term leases, the lessee is responsible for reporting and paying fuel 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 separate rules from the above when under intermittent leases. These separate rules cover situations where a moving company hires a subcontractor to move household goods to another jurisdiction. The lessee (household goods carrier) is responsible for reporting and paying fuel tax when the qualified motor vehicle is being operated under the lessee s jurisdictional operating authority. The lessor (independent contractor) is responsible for reporting and paying fuel tax when the qualified motor vehicle is operated under the lessor s jurisdictional operating authority. As an example, a moving company is hired to move household goods from Toronto to Calgary. The moving company then hires an independent contractor to move the household goods. The moving company (lessee) is responsible for reporting and paying fuel taxes, as the vehicle is operated under its authority. Once the goods are delivered to Calgary, the trip back by the independent contractor is under the independent contractor s authority, unless it rents out its qualified motor vehicle and driver to another moving company. The responsible party on the trip back will be the lessor (independent contractor) if the motor vehicle comes back empty or the independent contractor arranges for its own haul. However, if the independent contractor is hired by another moving company on the return trip, that moving company is responsible for reporting and 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 in Ontario. Interjurisdictional Carrier s Manual Page 9

10 REPORTING REQUIREMENTS Quarterly Fuel Tax Returns 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 motor vehicles, you will receive an IFTA Quarterly Tax Return - IFTA 501 form accompanied by the 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 qualified motor vehicles, you will receive a tax return which includes an IFTA Quarterly Tax Return Summary - IFTA 503 form and one IFTA Quarterly Fuel Schedule - IFTA 511 for each fuel type accompanied by the corresponding guide. Schedules must be filed for each fuel type. See sample forms on pages 29 and 30. Reporting Requirements Once you obtain decals and put them on your qualified motor vehicle(s), you are required to report all travel of the vehicle(s) on your IFTA return for as long as the IFTA decals are in effect. You are not permitted to exclude the travel on a fluctuating basis within the same year. If your operations change during the year, please notify the ministry so that you will be mailed the appropriate fuel tax return and schedules. If you do not receive your fuel tax return form, it remains your responsibility to file a return by the due date. Please contact the 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 your vehicles 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 is provided with the forms. Page 10 Interjurisdictional Carrier s Manual

11 Non-Standard Returns Prior approval is required if you use self-created or software-produced versions of the IFTA schedules which must provide a facsimile of the IFTA schedule. You must send a copy of your form to the Ministry of Revenue for approval to ensure it meets all of the requirements before you can use your own version. Note: Fuel and distance must be reported on the fuel tax return in litres and kilometres. Amended Returns If you need to correct a prior fuel tax return, please contact the ministry for a blank return 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. Due Dates Quarterly fuel tax returns must be postmarked or hand delivered by the due date shown on the top of every fuel tax return. If the due date falls on a Saturday, Sunday or a statutory holiday, the next business day is the due date. The reporting quarters and due dates are: IFTA Reporting Quarter Return Due Date 1 st Quarter - January to March April 30 2 nd Quarter - April to June July 31 3 rd Quarter - July to September October 31 4 th Quarter - October to December January 31 If your fuel tax return is late or full payment is not received, you will be subject to penalty and interest provisions. Failure to file a return with the ministry may result in your licence being revoked. Measurements for Fuel Tax Reporting You must report fuel usage and distance travelled in kilometres and litres. Please convert gallons to litres and miles to kilometres by using the following table. Round your totals to the nearest whole litre or kilometre. Conversion Table 1 litre US gallons 1 US gallon litres 1 mile kilometres 1 kilometre miles Interjurisdictional Carrier s Manual Page 11

12 Calculating Kilometres per Litre IFTA requires that you report both total kilometres and taxable kilometres when filing tax returns. On your returns: $ Include amounts for all distance travelled (both taxable and non-taxable distance), as well as all fuel placed in the supply tank (both taxable and nontaxable fuel), when calculating your kilometres per litres (KPL) for each fuel type. See explanation of non-taxable fuel use below, and $ Use the following formula to calculate the taxable kilometres for each jurisdiction in which you are claiming non-taxable distance. Taxable kilometres = total kilometres per jurisdiction minus non-taxable kilometres per jurisdiction. Note: All jurisdictions require documentation to support a claim of non-taxable distance. Non-taxable Distance Non-taxable distance, which includes vehicle exemptions and distance exemptions, is allowed when your vehicle(s) qualify for an exemption that is provided by an IFTA jurisdiction. For example, some jurisdictions allow non-taxable distance for travel on a toll highway or travel by a school bus. To see distance and vehicle exemptions for each jurisdiction, refer to the Exemption Database on the IFTA website. Non-taxable Fuel Use (Tax Exempt Fuel) 1. Biodiesel 2. Power Take Off (PTO) On your IFTA tax return, you must report all fuel placed in the supply tank of your qualified motor vehicles as taxable. Some IFTA jurisdictions provide a refund of the tax paid on tax exempt fuel. To see fuel exemptions for each jurisdiction, refer to the Exemption Database on the IFTA website. To claim a refund, you must submit your claim directly to each jurisdiction for tax paid on tax exempt fuel You must maintain adequate records to support any refund claims and contact the jurisdiction(s) to obtain information for any non-taxable fuel use in those jurisdictions. Refund claims submitted to Ontario for tax paid on biodiesel by IFTA licensed carriers are limited by the proportion of distance travelled in Ontario to the total distance travelled during the claim period, whether or not the claimant has purchased fuel in Ontario. IFTA licensed carriers are required to submit the Application for Refund: Clear Fuel Schedule 21 TEU and Claim Summary with a copy of their IFTA Quarterly Tax Return for the period(s) covered in the refund claim, along with the Calculation Worksheet for Biodiesel Refund showing the applicant s calculation of the amount of biodiesel 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 total distance travelled during the claim period, whether or not the claimant has purchased fuel in Ontario. Contact the ministry for the appropriate forms for claiming a refund. Do not claim a refund for power take-off on the regular IFTA tax returns. More information can be found in Tax Bulletin FT/GT Power Take-Off Refunds for Interjurisdictional Carriers Licenced under the International Fuel Tax Agreement or by calling the ministry at Page 12 Interjurisdictional Carrier s Manual

13 Tax Due and Credits When completing your fuel tax return, calculate your net tax due or credit claimed for this period by netting the tax due or credit amounts calculated for each jurisdiction in which you travelled for the reporting period. If the net result is tax due, you will need to send a cheque to Ontario for the net tax due amount. If the net result is a credit claim, Ontario will refund the credit amount. Please note, if your tax balance owing is less than ten dollars, payment is not required and only credits larger than $10 will be mailed to clients. The IFTA Tax Rates - IFTA 521 form included with your return lists the current tax rates and surcharge rates for each IFTA member jurisdiction for that reporting quarter. The tax rates have been converted to Canadian currency. You can not use old tax rate tables, as each quarter the tables are updated. The ministry will inform you of changes in tax rates and IFTA procedures. Access to the most recent IFTA NewsFlash is available on our website. The quarterly IFTA tax rate matrices can be found at the IFTA website. All tax payments and decal fee payments should be made payable to the Minister of Finance and mailed to: Ministry of Revenue IFTA Program 33 King Street West PO Box 620 Oshawa ON L1H 8H5 Note: Payments cannot be made at financial institutions. When cheques are returned by any financial institution, the ministry may assess a nonnegotiable cheque fee and will hold any refund (fuel tax or audit) or will use the refund amount to cover the returned cheque until full payment is received. Interjurisdictional Carrier s Manual Page 13

14 FAILURE TO FILE A QUARTERLY FUEL TAX RETURN Failure to File a Complete Fuel Tax Return If you fail to file a complete return IFTA 501 or IFTA 503 and IFTA 511 schedules, you will be subject to a penalty. A complete return allows the ministry to accurately report and transmit to each IFTA member jurisdiction. Failure to Pay Fuel Taxes 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 30 days from the date the assessment was mailed or personally delivered to file a Notice of Objection with Ontario s Tax Appeals Branch. The tax owing on an assessment is due despite an objection being filed. Tax credits pending on your account or any credit from an audit will first be applied to any tax due, interest, or penalty owing from quarterly fuel tax returns. Penalty and Interest Provisions 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. It is calculated separately for each jurisdiction. If a return and full payment are not received by the due date, a full month s interest accrues for any portion of a month on which tax owed remains unpaid. If a return and full payment is not received by the due date, interest will be charged to the last day of the month in which full payment is received. The interest rate is the Canadian Federal Treasury Bills rate, plus 2 per cent, adjusted every quarter. The quarterly interest rates can be obtained by contacting the ministry at any of the phone numbers listed on inside cover or by visiting Page 14 Interjurisdictional Carrier s Manual

15 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 a penalty and interest as shown below. In this example, the interest rate is 5 per cent per annum, and interest is calculated on the full month of August (31 days): Interest Calculation Penalty Calculation Tax Due (DR) Interest calculated only Penalty is calculated on Credit (CR) on fuel on tax due amounts; the net tax for the return tax 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 = $250 Michigan 2,500 DR Michigan = $12.74 Net taxes $5,000 DR Total Interest = $30.58 Assessment amount = interest + penalty = $ $ = $ Failure to File Fuel Tax Returns If you fail to file your fuel tax return(s), the ministry will estimate your tax liability for each member jurisdiction based upon the information available to the ministry. Your past filing history, or a minimum amount as determined by the ministry, will be used for this tax assessment (including interest and penalty). The ministry may require you to post a bond if you fail to file your tax returns. In these circumstances, it is your responsibility to prove that the ministry s assessment is incorrect. We suggest you file the required tax return for the period of the assessment so that the ministry can review the assessment. Interjurisdictional Carrier s Manual Page 15

16 LICENCE CANCELLATION, REVOCATION AND REINSTATEMENT Licence Cancellation You may cancel your IFTA licence when you are no longer operating qualified motor vehicles interjurisdictionally or you prefer to acquire single trip permits for interjurisdictional travel. If you wish to cancel your IFTA licence, check the appropriate box in the top right-hand corner of the IFTA Quarterly Tax Return IFTA 501/503 and enter the last date of business. The ministry may cancel your IFTA licence if you choose not to renew your IFTA licence or 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 tax returns, and has paid all taxes, penalties and interest due. If an IFTA licence is cancelled, 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 after your IFTA account is closed. You must keep all records on which the quarterly tax returns are based for four years from the return due date or filing date, whichever is later. The ministry will notify all IFTA member jurisdictions of your cancellation. To reactivate your cancelled account, you must submit a new application form, pay the required decal fees, provide your cancelled IFTA account number and a letter requesting reactivation. Licence Revocation 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 to comply with any other requirements. A notice of revocation will be mailed to the mailing address listed on your application. The ministry will notify all IFTA member jurisdictions of your licence revocation. For any interjurisdictional travel made while your licence is revoked, you must obtain single trip permits for each trip and for each jurisdiction you intend to travel, including Ontario. Page 16 Interjurisdictional Carrier s Manual

17 Licence Reinstatement To reinstate your revoked IFTA licence, you must satisfy the requirements which resulted in 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 the ministry. You will be required to complete a new application and pay the required decal fees to reactivate your account. The ministry may require that you post a bond to satisfy any potential liabilities to all member jurisdictions. The ministry will notify all IFTA member jurisdictions of your reinstatement. Bankruptcy If you file for bankruptcy, please contact: Ministry of Revenue IFTA Program 33 King Street West PO Box 625 Oshawa ON L1H 8H9 Bond Requirements IFTA registrants are not normally required to post a bond with Ontario. However, you may be required to post a bond for failing to file fuel tax returns, pay taxes, penalties or interest in the time allowed, or if an audit reveals that a guarantee is necessary to protect the interests of IFTA member jurisdictions. You may also be required to post a bond if a cheque is returned by your banking institution. Interjurisdictional Carrier s Manual Page 17

18 RECORDKEEPING REQUIREMENTS Record Retention Period You must maintain records to prove that the information reported on your fuel tax return is accurate. You must keep these records for four years from the return due date or filing date, whichever is later. You may keep the records on paper, microfilm, microfiche, or computerized storage system. You must be able to provide these records in a form acceptable to the ministry. Distance Records You must maintain distance records which show operations on an individual vehicle basis. This includes proof of taxable and non-taxable fuel use and taxable and nontaxable 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. Fuel Records You must keep a complete record of all fuel purchased, received, and used in the operation 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 reporting party, and $ amount of fuel purchased while travelling under a single trip permit - you are required to keep a copy of your single trip permit. Page 18 Interjurisdictional Carrier s Manual

19 Fuel Records (cont d) Keep a copy of the contract agreement indicating the party responsible for reporting and paying the motor fuel use taxes. Refer to section Contract Agreements on page 8 for details on who is responsible for reporting. Acceptable fuel receipts include an invoice, credit card receipt, microfilm/microfiche of the original invoice, automated vendor-generated invoices or transaction listings. Supplier s statements are not acceptable fuel receipts. Altered receipts will not be accepted. Bulk Fuel Storage If you own, lease or control a bulk storage facility, you may obtain credit for any tax paid on the fuel withdrawn from that storage facility and placed into the fuel tank of a qualified motor vehicle. You may claim the credit against the jurisdiction in which you purchased the bulk fuel and paid fuel tax. All invoices for bulk fuel purchases must be kept and your records must distinguish between fuel placed in qualified motor vehicles and non-qualified motor vehicles (such as cars, pickup trucks, small trucks, recreation vehicles or non-highway vehicles such as construction equipment and unlicenced farm vehicles) and third party sales. The records must show non-highway vehicles, such as construction equipment and farm vehicles, 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. Decal Inventory Log A record should be maintained identifying IFTA decals assigned to an IFTA qualified unit. Records to Support Nontaxable Distance Keep appropriate records to support non-taxable distance travelled which you have claimed on your fuel tax return. Interjurisdictional Carrier s Manual Page 19

20 AUDITS Audit Approach and Standards Tax audits for all fuel types will be conducted by Ontario on behalf of Ontario and all IFTA member jurisdictions in which your qualified motor vehicles travelled. When you are selected for an audit, the ministry will contact you in advance to schedule the audit at a mutually convenient time. The ministry will advise you of the time period to be audited and the records to be reviewed. The ministry will conduct the audit on behalf of all jurisdictions in which your qualified motor vehicles have travelled. If you do not keep 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 your audit. Ontario s audits conform to the standards documented in the IFTA Audit Manual. Audit Communications At the beginning of the audit, the auditor will meet with you to discuss such topics as your operation, audit procedures, records to be examined and the ministry s sampling methodology. Upon completion of the audit, the auditor will discuss the preliminary findings with you and recommend how to improve or simplify your record-keeping. Non-Compliant Record If your records are non-compliant or lacking sufficient detail to support the information filed on your returns or to determine your tax liability, the auditor may take one or more of the following actions: $ estimate your distance travelled and fuel consumption based on your reporting history 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 your IFTA licence. Audit Results The ministry will send you its audit findings which will address the completeness and accuracy 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 qualified motor vehicles travelled. If the ministry s auditor finds that you owe taxes to any member jurisdiction, you are required to pay the tax, penalty and interest owed directly to the ministry. The ministry will distribute your payment to each member jurisdiction. If the ministry finds that an IFTA jurisdiction owes you money, the ministry will credit your account for the amount owed to you by the other IFTA jurisdiction. Audits are completed by Ontario s auditors; however, representatives of other IFTA member jurisdictions may join the audit if they wish. If another IFTA member jurisdiction chooses to re-audit the ministry s findings, the auditors of the member jurisdiction must use the same sample period used during the original audit and conduct the re-audit in cooperation with Ontario s auditors. Page 20 Interjurisdictional Carrier s Manual

21 APPEALS 30- Day Objection Period You may object to any action or audit finding by filing a Notice of Objection form with Ontario s Tax Appeals Branch: Ministry of Revenue Tax Appeals Branch 1600 Champlain Avenue Whitby ON L1N 9B2 You can obtain an objection form by visiting our website at You may also 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 are obligated to pay all amounts due even if the decision on your objection is outstanding. Decision on Your Objection 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 may request each jurisdiction in which you operate to audit your records. However, the jurisdiction may deny the request. Jurisdiction(s) that agree to audit your records will audit only the information involving your operations within their jurisdiction. You will be responsible for all costs related to these audits. Interjurisdictional Carrier s Manual Page 21

22 GLOSSARY Auxiliary Equipment Equipment of a motor vehicle which is powered by motor fuel from the vehicle s fuel tank, but which is not used to propel the vehicle. Under certain circumstances, the operator may claim a Power Take-off refund for tax paid on the fuel used in the auxiliary equipment. Base Jurisdiction The jurisdiction where qualified motor vehicles are based for vehicle registration purposes, where the operational control and operational records of the licensee s qualified motor vehicles are maintained or can be made available, and where some travel 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 allows businesses 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 Agency 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 the International Fuel Tax Agreement. IJC Interjurisdictional Carrier Ministry Ontario Ministry of Revenue Page 22 Interjurisdictional Carrier s Manual

23 GLOSSARY (cont d) Non-taxable Distance Kilometres travelled that are not subject to the motor fuels use tax. Also kilometres travelled by an exempt vehicle. Each jurisdiction has its own unique definition of nontaxable kilometres. Non-taxable kilometres includes distance travelled in non-member jurisdictions, any non-taxable kilometres allowed by a jurisdiction, and travel during a valid period of a single trip permit. Please Note: All jurisdictions require documentation to support a claim of tax exempt kilometres. Ontario does not have tax exempt kilometres 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 weight exceeding 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 when used exclusively for personal pleasure by an individual. In order to qualify as a recreational vehicle, the vehicle shall not be used in connection with any business endeavour. Single Trip Permit A permit that allows conditional travel in a jurisdiction. Single trip permits may be purchased from authorized permit agents on a trip-by-trip basis. Single trip permits may include fees for registration, weight distance tax, fuels tax, other elements, or a combination of these. A trip permit expires when you leave a jurisdiction or at the end of a specified time period. Information on single trip permits may be obtained by contacting the ministry at the phone numbers listed on the inside cover. Interjurisdictional Carrier s Manual Page 23

24 APPENDIX A IFTA Member Jurisdictions Canadian Provinces AB BC MB NB NL NS ON PE QC SK Alberta British Columbia Manitoba New Brunswick Newfoundland Nova Scotia Ontario Prince Edward Island Quebec Saskatchewan United States AL Alabama ME Maine OH Ohio AR Arkansas MD Maryland OK Oklahoma AZ Arizona MA Massachusetts OR Oregon CA California MI Michigan PA Pennsylvania CO Colorado MN Minnesota RI Rhode Island CT Connecticut MS Mississippi SC South Carolina DE Delaware MO Missouri SD South Dakota FL Florida MT Montana TN Tennessee GA Georgia NE Nebraska TX Texas IA Iowa NV Nevada UT Utah ID Idaho NH New Hampshire VT Vermont IL Illinois NJ New Jersey VA Virginia IN Indiana NM New Mexico WA Washington KS Kansas NY New York WI Wisconsin KY Kentucky NC North Carolina WV West Virginia LA Louisiana ND North Dakota WY Wyoming Page 24 Interjurisdictional Carrier s Manual

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35 Queen s Printer for Ontario, 2007 ISBN (Print) ISBN (PDF) ISBN (HTML)