I tried last year to get Tesla and the government to fix this, but with no success. Tesla's reply was:
We have been advised by Canada Revenue that we must continue to collect the AC tax for our customers.
Canada Revenue stated that the AC tax was designed to apply to all air conditioners that were designed to be used in vehicles as part of the powertrain. The exemption regarding electric / propane-powered AC units was meant to apply only to those AC units that were secondary systems for vehicles like Winnebagos. The Agency is in the process of creating an official letter for Tesla that will clarify that stance. They would not give a specific timeline, but anticipated that we would receive it within a month. I can forward to you once received.
But that interpretation makes no sense to me, so I sent the following to my local MPs (before and after the election):
In December 2013, I bought an electric car - pure electric, no gas engine. As part of the purchase, I paid the $100 "air conditioner tax" that is commonly charged for cars with air conditioning. Then in November 2014, I came across this CRA memorandum:
X3-1 Goods Subject to Excise Tax, dated July 2013. Sections 17 and 18 of this memorandum reads:
Exceptions
17. The excise tax on air conditioners designed for automobiles, station wagons, vans or trucks applies only to those that are powered by the engines or power trains of the vehicles mentioned. Air conditioners that are powered by separate motors, propane or electricity are not subject to this tax.
18. Air conditioners specifically designed for motor homes regardless of how they are powered are not subject to excise tax. However, airconditioners of a design normally used in automobiles, station wagons, vans or trucks, even though installed in motor homes or chassis for motor homes, are subject to excise tax.
I asked the company I bought the car from about this (more for the sake of future electric car buyers than myself), and after a few months of investigation, they replied last week:
We have been advised by Canada Revenue that we must continue to collect the AC tax for our customers.
Canada Revenue stated that the AC tax was designed to apply to all air conditioners that were designed to be used in vehicles as part of the powertrain. The exemption regarding electric / propane-powered AC units was meant to apply only to those AC units that were secondary systems for vehicles like Winnebagos.
In electric vehicles, the air conditioner is
not part of the power train - it is powered by separate electric motors - so Section 17 clearly states that the excise tax does not apply. Secondly, this new interpretation that the exception applies only to motor homes seems to be falsely assuming that since the exception
does apply to motor homes, as described in section 18, it
does not apply to other types of vehicle, but this is a direct contradiction of section 17 that refers to automobiles.
Given that the air conditioner tax was introduced as a form of "gas guzzler tax" to add a cost to cars that consume more gas and pollute more, it seems very wrong to apply it to cars that consume zero gas and have no exhaust pipe. About 30% of Canada's CO2 emissions come from transportation (
https://flowcharts.llnl.gov/content/international/Canada_Carbon_2006.png) and about 60% and rising of Canadian electricity generation is zero-emission (
https://flowcharts.llnl.gov/content/international/Canada_Energy_2007.png), so all levels of government should be actively supporting electric vehicles as a portion of our climate change strategy. The July 2013 CRA memorandum exempts electric cars from theair conditioner tax, but the recent re-interpretation of the rules is strangely going in the opposite direction.
Could you initiate a further review of this?
Of course, I got no reply...
