Bill 97, Natural Gas Superhighway Act, 2013

Bill 97 2013

An Act to encourage the purchase of vehicles that use natural gas as a fuel

Preamble

Since the development of two of North America's first commercial oil wells near Oil Springs and Petrolia, Ontario, our province has been at the forefront of developing affordable and reliable energy resources for Ontario's residents and businesses. 

In order to meet the demand for an affordable, clean and safe source of fuel for future generations, businesses and governments are now exploring the transformative potential of natural gas as a transportation fuel for North America's energy dependent trucking and manufacturing sectors.

The recent development of the vast shale gas deposits in North America has driven demand for what is becoming a readily available domestic fuel source that has historically been priced lower than oil.  Estimates of the North American gas fields suggest accessible deposits of natural gas could meet North American demand for the next 100 years.

As a transportation fuel, natural gas (including both compressed natural gas and liquefied natural gas) represents a cleaner and lower cost alternative to traditional fuels and a viable solution to increased consumer costs.

While the initial costs to purchase natural gas vehicles can be higher for operators, the overall savings associated with using natural gas make switching an attractive option.  With an expected fuel cost savings of 20 to 30 per cent, major American trucking companies are already taking the important first steps to transition to natural gas as a fuel source.  Moreover, private investment is growing a network of dedicated fuelling stations across the United States, linking important manufacturing regions and transportation corridors.  

The Province of Quebec has taken an early lead by offering fiscal incentives to encourage fleets to purchase natural gas vehicles.  If Ontario does not take steps soon to open its borders to the same type of investment, it risks being left behind and our businesses will lose their ability to get their products to market at competitive prices.  The best way to encourage fleets to adopt low carbon emission natural gas vehicles is to reduce the financial risk by offering a time limited, non-refundable tax credit for the purchase of vehicles that use natural gas as a fuel and to ensure that weight limits on roads are adjusted to accommodate the added weight of liquefied natural gas vehicles.

Therefore, Her Majesty, by and with the advice and consent of the Legislative Assembly of the Province of Ontario, enacts as follows:

Highway Traffic Act

   1.  The Highway Traffic Act is amended by adding the following section:

Regulations, vehicles that use liquefied natural gas as a fuel

   126.1  (1)  The Lieutenant Governor in Council may make regulations prescribing weight limits, other than those specified or referred to in any provision in this Part, that apply to vehicles that use liquefied natural gas as a fuel.

Where weights set by regulation apply

   (2)  A weight limit prescribed under subsection (1) applies to vehicles that use liquefied natural gas as a fuel instead of the weights specified or referred to in a particular provision in this Part.

Tabling report in Assembly

   (3)  Unless a regulation is made under subsection (1), the Minister shall, on every anniversary of the day the Natural Gas Superhighway Act, 2013 receives Royal Assent, table a report in the Legislative Assembly that includes reasons why such a regulation has not been made and the progress that has been made in developing the regulation.

Taxation Act, 2007

   2.  The Taxation Act, 2007 is amended by adding the following Part:

Part v.9
tax credit for vehicles that use Natural Gas as a fuel

Tax credit for vehicles that use natural gas as a fuel

Definition

   104.42  (1)  In this section,

"qualifying vehicle" means a vehicle that uses natural gas as a fuel, other than a type or class of vehicle prescribed by the Minister of Finance.

Amount of tax credit

   (2)  A taxpayer may deduct from the amount of tax otherwise payable under this Act for a taxation year ending after this section comes into force, a tax credit not exceeding the lesser of,

  (a)  the amount of tax payable by the taxpayer under this Act for the year before making the deduction under this section; and

  (b)  the taxpayer's eligible amount for the year as determined under subsection (3).

Eligible amount

   (3)  A taxpayer's eligible amount for a taxation year is determined as follows:

    1.  Determine the sum of the taxpayer's eligible expenditures made in the year and in the previous five taxation years.

    2.  Determine the sum of the amounts, if any, deducted under this section for the previous five taxation years.

    3.  Deduct the amount determined under paragraph 2 from the amount determined under paragraph 1 to determine the eligible natural gas amount for the year.

Eligible expenditure

   (4)  An eligible expenditure means half of the amount of the tax payable under subsection 165 (2) of the Excise Tax Act (Canada) that the taxpayer paid in respect of the purchase of a qualifying vehicle, if the amount is paid in or after the first taxation year ending after this section comes into force but before the end of the seventh taxation year after this section comes into force.

Partnerships

   (5)  If a taxpayer is a partner in a partnership, but is not a limited partner, and the partnership would qualify for a fiscal period ending in a taxation year of the partner for a tax credit under this section if the partnership were a corporation or an individual and its fiscal period were its taxation year, the portion of the partnership's eligible amount that may reasonably be considered to be the partner's share of that amount may be included in determining the partner's total eligible amount for the partner's taxation year.

Application

   (6)  This section does not apply unless the Federal Minister has agreed to make the amendments to the collection agreement referred to in subsection 161 (1) that are necessary to authorize the administration of the tax credit under this section by the Canada Revenue Agency on behalf of the Minister of Finance.

Commencement

   3.  This Act comes into force on the day it receives Royal Assent.

Short title

   4.  The short title of this Act is the Natural Gas Superhighway Act, 2013.

 

EXPLANATORY NOTE

The Bill amends the Highway Traffic Act and the Taxation Act, 2007.

Part VIII of the Highway Traffic Act currently sets out weight limits for vehicles.  New section 126.1 of the Act enables the Lieutenant Governor in Council to make regulations prescribing different weight limits for vehicles that use liquefied natural gas as a fuel.  The Minister of Transportation is required to table a progress report in the Legislative Assembly every year until a regulation is made.

The Taxation Act, 2007 is amended to provide for a non-refundable tax credit to taxpayers who purchase certain vehicles that use natural gas as a fuel.  The tax credit is equal to half of the Ontario portion of the HST that the taxpayer paid for the vehicle.  To qualify, the HST on the vehicle must be paid within a period of seven taxation years, beginning with the first taxation year that ends after the Bill receives Royal Assent.  Any unused tax credits in a taxation year may be carried forward and deducted in the following five years.