Lower Your Fuel Costs and Boost Your Fleet’s Productivity: How to Claim the PTO Tax Refund for Canadian Trucking Companies
Note: PTO Calculator Below.
As a trucking company in Ontario, you know that fuel costs can be a significant expense for your business. But did you know that you may be eligible for a tax refund on the fuel used for your power take-off (PTO) operations?
In this blog post, we’ll take a deep dive into the PTO tax refund program in Ontario and explain how you can claim this valuable benefit to lower your fuel costs and boost your fleet’s productivity.
What is the PTO Tax Refund in Ontario?
The PTO tax refund is a government program that allows businesses in Ontario to claim a refund on the tax paid on clear diesel fuel, gasoline, or propane used for PTO operations. A PTO operation refers to auxiliary equipment added to a licensed motor vehicle that uses fuel from the vehicle’s fuel tank(s) to operate PTO equipment, such as cement mixers, aerial buckets and lifts, refrigeration units, and power vacuums, pumps, and blowers.
To be eligible for the PTO tax refund, the following conditions must be met:
- The motor vehicle must be licensed under the Highway Traffic Act.
- The use of the auxiliary equipment must occur in Ontario.
- The auxiliary equipment must be powered using the same fuel tank that is used to power the motor vehicle.
- The power from the auxiliary equipment must not be used to propel the motor vehicle.
- The motor vehicle must not be principally used to transport passengers.
- The auxiliary equipment must not be used for personal use, pleasure, or recreation.
- Tax must have been paid to Ontario in respect of the fuel used during the PTO operation.
The PTO tax refund must be filed and received by the Ministry of Finance (MOF) within four years from the date the tax was paid.
How to Calculate Your PTO Tax Refund
There are two methods for calculating your PTO tax refund, depending on when the PTO activity took place:
- PTO activity before July 1, 2017: You may use either readings from separate meters or electronic control modules that measure the fuel supplied to the auxiliary equipment, or set allowances approved by the MOF for different kinds of PTO operations, based on information from equipment manufacturers.
- PTO activity on or after July 1, 2017: A PTO tax refund is calculated by applying a predetermined percentage allowance against the total fuel disbursed to the licensed vehicle containing the qualifying auxiliary equipment. The MOF has established allowances for various types of PTO operations based on activity type, such as vacuum trucks, paper shredders, and reefer units.
If you are an interjurisdictional carrier licensed under the International Fuel Tax Agreement (IFTA) and applying for a PTO tax refund, the refundable portion is calculated on the total distance travelled in Ontario during the claim period. For example, if you travel a total of 10,000 miles in Ontario during a claim period and your PTO allowance is 10%, your refund would be calculated as follows:
Refund amount = Total miles travelled in Ontario x PTO allowance = 10,000 miles x 10% = $1,000
How to Apply for the PTO Tax Refund
There are two ways to apply for the PTO tax refund:
- For refunds under $500: You can claim your PTO tax refund by completing Form L-481, “Application for Refund – Power Take-Off Operation.” You can find this form on the MOF website, or you can request it by contacting the MOF at 1-866-ONT-TAXS (1-866-668-8297).
- For refunds over $500: You must complete Form L-481 and attach it to your fuel tax return, along with any supporting documentation.
Regardless of the amount of your refund, you must keep records and receipts for your PTO operations for at least four years from the date the tax was paid. This includes:
- Copies of all fuel invoices or fuel purchase receipts.
- Copies of all motor vehicle license documents.
- Copies of all documents showing the purchase, sale, or use of the auxiliary equipment.
- If you are using separate meters or electronic control modules to measure fuel usage, you must also keep copies of the meter readings and any maintenance records.
If you are claiming a PTO tax refund for PTO activity on or after July 1, 2017, you must also keep records of the following:
- The make and model of the licensed vehicle.
- The date the vehicle was licensed.
- The serial number of the vehicle.
- The business number of the licensee.
The MOF recommends that you keep these records in a secure and organized manner, as they may be subject to audit at any time.
Conclusion
As a trucking company in Ontario, you have the opportunity to claim a valuable tax refund on the fuel used for your PTO operations.
