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Excise Tax on Fuel Inefficient Cars
1. What is the new Excise Tax (Green Levy) on Fuel Inefficient
Vehicles?
2. What vehicles will the new excise tax apply to?
3. How is the new excise tax calculated?
4. Who does the new excise tax apply to?
5. When will the new excise tax come into effect?
6. Where can I get more information about the new excise tax?
7. Are used vehicles imported into Canada subject to this new
tax?
Q.1 What is the new Excise Tax (Green Levy) on Fuel Inefficient Vehicles?
A.1 The budget proposes to introduce a vehicle efficiency incentive (VEI)
designed to promote the purchase of fuel-efficient vehicles in Canada.
The VEI includes:
• A rebate for highly fuel-efficient vehicles;
• A neutral treatment for vehicles of average fuel efficiency; and
• A new excise tax on fuel inefficient vehicles.
The CRA will be administering the new excise tax on fuel inefficient vehicles.
Q.2 What vehicles will the new excise tax apply to?
A.2 The excise tax will apply to certain new automobiles (including station
wagons, vans and sport utility vehicles) designed primarily to carry passengers.
The excise tax does not apply to pick-up trucks, vans equipped to accommodate
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ten or more passengers, ambulances and hearses. Please refer to question 3 to
find out which vehicles are subject to the excise tax.
Q.3 How is the new excise tax calculated?
A.3 The excise tax is calculated on the basis of the weighted average fuel
consumption, as determined in accordance with information published by Natural
Resources Canada. For purposes of this excise tax, the weighted average is
calculated by combining 55% of the city fuel consumption rating with 45% of the
highway fuel consumption rating. A listing of vehicles and associated fuel-
efficiency ratings can be found on the Natural Resources Canada Web site:
http://oee.nrcan.gc.ca/transportation/tools/fuelratings/ratings-search.cfm?attr=8
For your convenience a listing of 2007 model year vehicles, their weighted
average