Carbon Tax in Construction – What You Need to Know

Carbon Tax in Construction - What you need to knowAll Canadian provinces are mandated by the federal government to implement a provincial carbon tax by 2018. This article discusses 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: http://crowemackay.ca/blog/articles/carbon-tax-canada/

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:

1.    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 three-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.

2.    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, blanket, roll, panel, loose fill, or cellular plastic material;
  • polystyrene forming blocks designed as a form for concrete, which remains 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 (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. 

3.    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 convert 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, 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 convert direct current into alternating current.

4.    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. Conversion kits meant to convert motor vehicles to operate solely on electricity are also exempt from PST.

5.    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 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 takeoff unit;
  • operating a mobile crane;
  • operating a hydraulic arm mounted on a logging truck.

6.    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 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 including:

  • 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.

Need help navigating the technicalities of carbon tax and your business? Call our experts today. Our professional team at Crowe MacKay LLP will be available to assist you identify and maximize any exemption and tax refund opportunities for your business. Please feel free to contact Catarina Wong at (604) 697-5221 or at catarina.wong@crowemackay.ca, or John Diduch at (250) 763-5021 or at john.diduch@crowemackay.ca.


This article first appeared in the Spring 2017 issue of SICA's Construction Review Magazine. To read the entire magazine click here.

courthouse-1799353_640.jpg
August 30, 2017

Obligation of Good Faith in Contracting

The Supreme Court of Canada changed the legal landscape for contracts in the decision of Bhasin v. Hrynew, [2014] SCC 71. This decision created a new common law obligation of good faith that applies to all commercial contracts.
Read More
write-593333_1920.jpg
August 23, 2017

Embracing the Purpose Era

Regardless of the size of your business or the sector you operate in, the purpose movement is shaking up the rules of business and ringing in a new era where business is an active participant in making the world a better place.
Read More
blueprints-1837238_1920.jpg
April 05, 2017

Reaching the Millennials | Attracting the right people is in how the story is told

With businesses adjusting to the era of the happy workplace, concepts such as social responsibility, company culture, and employee engagement are common buzz words used around the open-concept, flexible, shared workspace. They are used more so as companies shift their recruiting focus toward the millennials, the largest generation in the workforce today.
Read More
News-Feature.PNG
May 09, 2016

SICA's New Website Launches

We are excited to announce that our new website is live! We have been busy working behind the scenes and are so excited for you to utilize all the new features.
Read More
kelowna-yacht-club.jpg
October 15, 2015

Kelowna Yacht Club takes top honors

Kelowna Yacht Club was the Judges’ Choice best overall entry winner in the 7th Annual Southern Interior Construction Association Commercial Building Awards Thursday night at the Coast Capri Hotel.
Read More
building-768815_1920.jpg
September 01, 2015

A word from the COO 2015

This year “the new normal” is a term we seem to be using frequently. It’s reflected in the fact that although we are finally busy with projects both public and private, we struggle with finding enough skilled labour to maintain schedules and quality of work. Some of that pressure is relieved by a deflated oil patch but we are kidding ourselves if we think that’s a long term solution.
Read More
Commercial_Building_Awards2016.png

Commercial Building Awards - Finalists Announced!

A spectacular assortment of commercial and industrial buildings have been named as finalists for the 8th Annual Southern Interior Construction Association Commercial Building Awards, set for Thursday, Oct. 27 at the Four Points Sheraton Hotel in Kelowna.
Read More