Canada has extended its temporary federal fuel excise tax suspension through Jan. 31, 2027, keeping the tax at zero on leaded and unleaded aviation gasoline as well as other aviation fuels. Under a government announcement Thursday, the suspension saves 11 Canadian cents per liter on leaded avgas, 10 cents per liter on unleaded avgas and 4 cents per liter on other aviation fuel.
Rates Return in February
The tax will begin returning Feb. 1 at half of its normal rate. Through March 31, Canada will collect 5.5 cents per liter on leaded avgas, 5 cents on unleaded aviation gasoline and 2 cents on other aviation fuel. Full rates are scheduled to return April 1 under the government’s draft amendments.
The aviation fuel exemption is part of a broader tax holiday covering gasoline and diesel. Canada estimates the latest extension will add about $2.9 billion in tax relief and bring the program’s total estimated relief during the 2026-27 fiscal year to $5.3 billion.
Tax Holiday Began in April
Canada originally announced the suspension in April after disruptions related to the Middle East conflict drove up global oil prices. The initial tax plan took effect April 20 and was scheduled to expire Sept. 7. Federal excise taxes are generally collected from manufacturers or wholesalers and incorporated into the retail price of fuel.
The suspension was later incorporated into Bill C-30, which implements measures from Canada’s Spring Economic Update. The measure received Royal Assent June 19 and temporarily eliminated the federal excise tax on aviation fuels alongside the gasoline and diesel reductions, according to the Finance Department.
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