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      Monday, February 19, 2018

Do farmers, commercial loggers, trappers and fishers need a valid Fuel Tax Exemption Permit to purchase marked diesel fuel for use in their farming and primary producing activities?

Yes. Tax reduced marked diesel fuel, other than fuel used solely for heating purposes, may only be purchased and used by persons holding a valid Fuel Tax Exemption Permit. A person may request an application for a permit by phoning the Farm Fuel Program toll free at 1-800-667-7587.

For what purposes may a farmer use tax reduced marked diesel fuel?

Farmers with a valid Fuel Tax Exemption Permit may purchase tax reduced marked diesel fuel in bulk, from bulk fuel dealers, for use as follows:

  • in their farm machinery and equipment used in their farming operation; and
  • in a vehicle that is registered as a "Class F" vehicle pursuant to The Vehicle Classification and Registration Regulations.

Farmers must use clear diesel fuel if the "Class F" vehicle is being used for non-farm business or employment purposes.

For what purposes may a commercial logger use tax reduced marked diesel fuel?

Commercial loggers may use marked diesel fuel in their unlicenced equipment while engaged in logging or reforestation activities upstream from the mill gate. Unmarked or clear diesel fuel must be used by saw mills and pulp and paper operations. Also, clear diesel fuel must be used by truckers when hauling logs and finished products to market.

Do farmers have to replace the marked diesel fuel that is in their vehicle tank when they perform a commercial activity?

Farmers who use their vehicles for other business purposes will not be required to drain their tanks of the marked diesel fuel, provided they have purchased a temporary permit. Permits may be obtained by calling 1-800-667-7575. The permit must be valid during the time that marked diesel fuel is in the tank. This permit only allows the operator to use the fuel already in the tank. It does not allow the operator to place additional marked diesel fuel in the tank while a temporary upgrade permit is in force.

Farmers may use marked diesel fuel while clearing snow from their local municipal road or a local access road and they are not commercially compensated. However, clear diesel fuel must be used while clearing snow from roads in cities, towns and villages and from all roads identified on Saskatchewan's grid road map.

As the manager or owner of a bulk fuel facility that is using a dye injector, what am I responsible for and what offences could I be subject to under The Fuel Tax Act, 2000?

All persons who mark diesel fuel must be authorized to do so by Saskatchewan Finance. It is an offence for an unauthorized person to mark diesel fuel. If you have not received your authority, please call Saskatchewan Finance at 787-7683.

In addition to being authorized to mark diesel fuel, you are responsible to ensure that all equipment related to the injection of dye is working properly and that all safeguards with respect to controls are followed.

Enforcement officers inspect injector sites on a regular basis and may lay charges for infractions and also issue tax assessments as a result of the following:

  • Failure to maintain the injector unit in a properly sealed manner, thereby allowing access to unauthorized persons;
  • Using systems which are not dyeing in the correct proportion;
  • Failing to report the removal of seals within a two day period;
  • Tampering with equipment used in the dyeing process; and
  • Selling diesel fuel which has been blended in order to evade or reduce the tax.

Can I sell marked diesel fuel as heating fuel?

Bulk dealers may sell market diesel fuel as heating fuel to their customers.  When selling marked diesel fuel as heating fuel, bulk dealers must keep records showing the name of the purchaser and must ensure that the fuel is being acquired for an authorized purpose, verifying the purchaser's requirement for heating fuel. This is done by delivering the heating fuel to the customer or ensuring the fuel is sold to an exemption permit holder authorized to purchase heating fuel.  In addition, transaction detail for all heating fuel sales must be reported to Saskatchewan Finance.  Where the bulk fuel dealer delivers fuel to a single storage tank that is also used to supply fuel for a taxable activity (e.g. to operate a rig engine), the bulk dealer must only sell clear diesel fuel. The purchaser may apply directly to Saskatchewan Finance for a refund of tax paid on the clear diesel fuel that is used for heating. Please call Saskatchewan Finance at 787-7686 for more information on what is required to obtain a refund.

Can I sell marked diesel fuel through my keylock, cardlock or service station facility?

Keylock, cardlock and service station facilities may only be used to dispense marked diesel fuel to valid Fuel Tax Exemption Permit holders. The following conditions must also be met at the fuel dispensing facility:

  • Vendors must be registered with Saskatchewan Finance and report all tax exempt fuel sales as required by the Automated Up-Front Exemption (AUFES) System.
  • Access to marked diesel fuel in a keylock or cardlock must be restricted to valid Fuel Tax Exemption Permit holders.
  • Pumps that dispense marked diesel fuel must be clearly marked to show that they contain marked diesel fuel for use only by persons who hold a valid Fuel Tax Exemption Permit.
  • Fuel dispensed from a service station facility must be dispensed directly into a tank that is not connected to the fuel system of a motor vehicle.
  • An invoice must be completed for all sales of marked diesel fuel and retained at the location for audit purposes. All invoices must show the customer's name and permit number. Marked diesel fuel sold as a "cash sale" (without the customer's name) is not permitted.
  • Periodic inventory readings and purchase invoices for marked diesel fuel must be made readily available for inspection.

Can diesel fuel from Alberta or Manitoba be used in Saskatchewan?

Diesel fuel that has been dyed for tax purposes by Alberta or Manitoba is no longer allowed in Saskatchewan tax free. Casual importers are now required to report bulk importations of dyed diesel fuel and account for the tax. 

For information on importing fuel, please refer to FT-7, Information For Importers.

If I deliver marked diesel fuel to a customer by mistake, can I collect the tax and mark the invoice that tax was paid, thereby allowing the customer to use the fuel for a taxable purpose?

No. Marked diesel fuel is marked to identify it as tax reduced fuel. Marked diesel fuel can only be used for an exempt purpose. If marked diesel fuel has been delivered in error, you may wish to contact Saskatchewan Finance at 787-7688 to discuss the circumstances.

What should I do if I accidentally blend fuel?

If you have an accidental blending, you must immediately report the accident to Saskatchewan Finance by calling 787-7683. The accidental blending will be investigated and you will be advised of the tax requirements.

Can I use my Fuel Tax Exemption permit to purchase tax free gasoline?

No. Effective April 1, 2017, the partial Fuel Tax exemption for bulk purchases of gasoline is eliminated. Fuel Tax Exemption Permit holders are required to pay the full fuel tax on gasoline purchases.

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