Key Fuel Programs – Alternative Motor Fuel Program

In order to encourage the development and use of cleaner and more environmentally friendly motor fuels, we provide motor fuel tax concessions.

For the purposes of these concessions, motor vehicles are defined as vehicles designed to be self-propelled on land, highways and public roads, including cars, trucks, vans, sport utility vehicles (SUVs), and similar types of automobiles. We provide Motor Fuel tax concessions for some alternate fuels. Please note that these tax concessions do not apply to coloured, locomotive, marine diesel, jet or aviation fuel.

Concessions apply to the following four types of alternative fuels:

Natural gas and alcohol-based fuels (blends of gasoline or diesel fuel with at least 85% ethanol or methanol) are exempt from motor fuel tax when purchased to propel a motor vehicle.

Propane purchased for use in operating a motor vehicle, or operating a stationary engine, is subject to tax under the Motor Fuel Tax Act. Effective March 1, 2003, the tax rate on propane is 2.7 cents per litre, resulting in a preferential rate for propane when compared to gasoline and diesel fuel.

Effective July 1, 2004, the ethanol portion, including denaturant, of an ethanol/gasoline or gasoline/diesel blend is exempt from tax if the ethanol portion is not less than 5% or more than 25% of the volume of the blend.

Effective February 20, 2008, ethanol used as coloured fuel, marine diesel, locomotive fuel, jet fuel or aviation fuel are exempt from tax. This includes the portion used in any biodiesel fuel blend and any ethanol blend in which the ethanol portion is from 5% to 25%. Previously, ethanol was only exempt from tax when used in motor vehicles on a highway.

Effective February 21, 2007, biodiesel is exempt from tax when used on-highway. This exemption includes the biodiesel portion of any blend of biodiesel and diesel fuel, as well as pure biodiesel (B100).

Effective February 20, 2008, biodiesel used as coloured fuel, marine diesel, locomotive fuel, jet fuel or aviation fuel are exempt from tax. This includes the portion used in any biodiesel fuel blend and any ethanol blend in which the ethanol portion is from 5% to 25%. Previously, biodiesel was only exempt from tax when used in motor vehicles on a highway

For more information on the Alternative Fuel Program, and for information on Social Service Tax concessions for Alternative Fuel Vehicles, please see Bulletin SST 085, Alternative Fuel Vehicles and Alternative Motor Fuel Tax Concessions and Bulletin MFT 005, Tax Rates on Motor Fuels.