Canada: Carbon Tax In Construction – What You Need To Know

Last Updated: December 16 2016
Article by Catarina Wong

All Canadian provinces are mandated by the federal government to implement a provincial carbon tax by 2018. This article will discuss how provincial taxes; including carbon tax, motor fuel tax and provincial sales tax—"PST", impact the construction industry.  For a detailed discussion this topic, please refer to our article "Carbon Tax in Canada", which can be found at:

While there is no specific exemption from the B.C. Carbon Tax for the construction industry, there are a few important issues and tax exemptions that may be noteworthy:

B.C. Carbon Tax on cement

The B.C. carbon tax is applied only to domestically produced cement, while imported cement from the U.S. and Asia is exempt, thus, resulting in a higher cost on domestically produced cement for construction use. To offset this, the B.C. provincial government has proposed "transition incentives" of $22 million to be paid over a 3-year period to encourage the B.C. cement industry to adopt cleaner fuels and further lower emission intensities in order to offset the inequities between domestically produced and imported cement.

B.C. PST Exemption On Energy Conservation Materials and Equipment

The following materials and equipment are exempt from PST when acquired to prevent heat loss from a building:

  • Thermal insulation material that is a batt, a blanket, a roll, a panel, loose fill or cellular plastic material;
  • Polystyrene forming blocks designed for use initially as a form for concrete, and remaining permanently attached to the concrete to serve as the primary insulation for the completed buildings;
  • Fastening components specifically designed for use with exempt polystyrene forming blocks,
  • Chemicals obtained for use to make spray polyurethane foam insulation;
  • Window insulating systems consisting of transparent or translucent film, including frames or integral parts of the systems, installed in an existing window and designed primarily to retain heat in a building by absorbing solar heat or reducing drafts;
  • Weather stripping and caulking materials designed to prevent heat loss (e.g., bathtub caulking would not qualify);
  • Insulation that is designed to prevent heat transfer to or from hot water tanks, hot or cold water pipes, or ductwork.

B.C. PST Exemption For Alternative Energy Source

The following materials and equipment are exempt from B.C. PST:

  • Wind-powered generating equipment specifically designed to produce mechanical or electrical energy, and generators, controllers, wiring, and devices that covert direct current into alternating current;
  • Equipment specifically designed to produce mechanical or electrical energy from ocean tides, currents of waves, and generators, wiring, controllers, monitors, pumps, tubing, floats, and water fences, aids to navigation, and devices that convert direct current into alternating current;
  • Solar photovoltaic collector panels, and wiring, controllers, and devices that convert direct current into alternating current;
  • Solar thermal collector panels, and wiring, pumps, tubing, and heat exchangers;
  • Micro-hydro turbines and generators designed to produce up to 150 kilowatts of mechanical or electrical energy, and , controllers, wiring, and devices that covert direct current into alternating current.

B.C. PST Exemption For Electricity, Natural Gas and Propane Conversion Kits

Natural gas and propane conversion kits for internal combustion engines are exempt from PST. Kits to convert motor vehicles to operate solely on electricity are also exempt from PST.

B.C. Motor Fuel Tax Exemption

A motor fuel tax exemption is provided for B.C. businesses that operate an engine of a motor vehicle while the vehicle is stationary, the engine has its own fuel tank, is not used to operate the vehicle while in motion and the engine operates equipment for the purpose of any of the following:

  • rotating the drum of a ready-mixed concrete truck or pumping ready-mixed concrete,
  • pumping or dispensing liquids or other materials, such as water, milk, flour, syrups, fertilizer and fuel, to or from a commercial vehicle (this does not include the use of a hydraulic arm, unless it is on a logging truck, or a hydraulic cylinder),
  • operating a drilling unit that is operated by a power take-of unit;
  • operating a mobile crane,
  • operating a hydraulic arm mounted on a logging truck.

Other B.C. Fuel Tax Exemptions

There are various provincial tax exemptions available for the construction industry:

You may use coloured fuel in road-building machines when the vehicle is used:

  • at a highway project area;
  • by or for the provincial or municipal government in construction or repair of roads maintained by the government, including logging, mining, or petroleum and natural gas access roads on Crown land, or
  • for travel to and from locations where the use of coloured fuel is authorized

You must use clear fuel in road-building machines when:

  • the vehicle is used on a highway outside a highway project are for grading, clearing, snow ploughing or other maintenance activities, or
  • the vehicle is not used by or for the provincial or municipal government in construction or repair of roads maintained by the government.

Road-building machines include:

  • bulldozers, compactors, loaders, self-propelled compressors, paving machines, rollers, cranes, scrapers, dumptors, tractors, machines equipped with shovels, articulated rock trucks, and
  • trucks, such as Euclids that, because of their size, are not permitted to travel on-highway without a permit.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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