Overview
On April 14, 2026, the federal government announced its intention to temporarily suspend federal excise tax on unleaded gasoline, unleaded aviation gasoline, diesel fuel and aviation fuel, and released draft legislative proposals to amend the Excise Tax Act (the “Act”) to give effect to that measure. The stated purpose of the proposal is to provide temporary relief from elevated fuel prices.[1]
If enacted as proposed, the measure would temporarily reduce the federal excise tax rate on these fuels to zero from April 20, 2026 to September 7, 2026, inclusive, with the applicable rates reverting to their current levels on September 8, 2026.[2]
Proposed Legislative Change
The draft legislation would temporarily reduce to zero the federal excise tax rates otherwise imposed under Part III of the Act on the affected fuels.[3] The measure remains proposed only. The Canada Revenue Agency (“CRA”) has expressly stated that its commentary should not be taken as confirmation that the proposed amendments will be enacted in their current form.[4]
Affected Fuels and Proposed Rates
The following table sets out the excise tax rates for unleaded gasoline, unleaded aviation gasoline, diesel fuel and aviation fuel under Schedule I to the Act, together with the proposed reduced rates, if enacted as proposed:[5]
| Federal Excise Tax Rate Before April 20, 2026 | Proposed Federal Excise Tax Rate from April 20, 2026 to September 7, 2026 | |
| Unleaded gasoline | $0.10 per litre | $0.00 per litre |
| Unleaded aviation gasoline | $0.10 per litre | $0.00 per litre |
| Diesel fuel | $0.04 per litre | $0.00 per litre |
| Aviation fuel (other than aviation gasoline) | $0.04 per litre | $0.00 per litre |
When the Reduced Rate Would Apply
The proposed temporary reductions would apply where excise tax on the affected fuel becomes payable after April 19, 2026, and before September 8, 2026.[6]
This would generally include fuel manufactured or produced in Canada and delivered to a purchaser, sold by a licensed wholesaler and delivered to a purchaser, or imported into Canada, during that period.[7]
Inventory and Transition Issues
The CRA has also addressed transition issues that may be relevant to affected businesses. In particular, the temporary rate reductions would apply to affected fuel delivered or imported after April 19, 2026, and before September 8, 2026. In addition, a person holding tax-paid inventory on April 20, 2026, would not be eligible for a refund in respect of that inventory, and no excise tax would be payable on inventory held on September 8, 2026, when the temporary reduction ceases to apply.[8]
Filing and Reporting Implications
The proposed measure would affect not only tax rates, but also compliance obligations for affected manufacturers, producers, licensed wholesalers, and importers.
The CRA has stated that excise tax returns would still need to be filed to report quantities even where the amount of tax payable is nil. In addition, for the April 2026 and September 2026 reporting periods, returns would involve multiple rate calculations because the proposed reduction would begin and end partway through monthly reporting periods.
In those cases, taxpayers would need to calculate the quantity for each tax rate and report the tax payable based on the rates applicable at the time of delivery. The CRA has also cautioned electronic filers not to rely on automatic calculations for those partial periods. Instead, they would need to manually enter the tax payable amounts in the “Tax payable in dollars” field.[9]
Key Limitations
The proposal is limited in scope.
- It would affect only the specific federal excise tax rates imposed under Part III of the Act on the listed fuels.[10]
- It would not affect leaded gasoline and leaded aviation fuel, which remains at $0.11 per litre.[11]
- Provincial fuel taxes would continue to apply.[12]
- The proposal does not directly change GST/HST, which remains a separate layer of indirect tax.
- The measure would apply only to fuels otherwise subject to federal excise tax. For example, heating oil is already exempt, and natural gas and propane are not subject to federal excise tax under these rules.[13]
Closing Observations
The proposed temporary reduction in federal fuel excise tax may provide short-term relief in the fuel supply chain, but the measure should be understood as draft legislation rather than enacted law. Businesses affected by the proposal should pay particular attention to the statutory timing rule for when tax becomes payable, the absence of relief for tax-paid opening inventory, and the transitional filing implications for April and September 2026.
We will continue to monitor the status of the draft legislation and CRA administrative guidance.
Contact our team of Experts
This article was prepared by the individuals listed below. For further information on the above, we invite you to please reach out Nicolas Rondeau of Andersen Inc.
 | Nicolas Rondeau, CPA, Partner |  | Irvin Jay Sarenas, CPA, Senior Manager |
[1] Department of Finance, Temporarily Suspending the Federal Fuel Excise Tax (14 April 2026); Department of Finance, Draft Legislative Proposals to amend the Excise Tax Act (April 2026).
[2] Ibid.
[3] Department of Finance Canada, Draft Legislative Proposals to amend the Excise Tax Act (April 2026).
[4] Canada Revenue Agency, Excise Duty Notice ETSL82, Proposed temporary rate reductions of excise tax on certain types of fuel (2026).
[5] Canada Revenue Agency, Excise Duty Notice ETSL82, Proposed temporary rate reductions of excise tax on certain types of fuel (2026); Excise Tax Act, R.S.C. 1985, c. E-15, Part III.
[6] Department of Finance Canada, Draft Legislative Proposals to amend the Excise Tax Act (April 2026); Canada Revenue Agency, Excise Duty Notice ETSL82, Proposed temporary rate reductions of excise tax on certain types of fuel (2026).
[7] Canada Revenue Agency, Excise Duty Notice ETSL82, Proposed temporary rate reductions of excise tax on certain types of fuel (2026).
[8] Ibid.
[9] Ibid.
[10] Excise Tax Act, R.S.C. 1985, c. E-15, Part III; Department of Finance Canada, Draft Legislative Proposals to amend the Excise Tax Act (April 2026).
[11] Ibid.
[12] Canada Revenue Agency, Excise Duty Notice ETSL82, Proposed temporary rate reductions of excise tax on certain types of fuel (2026).
[13] Ibid.
