Canada Extends Aviation Fuel Tax Suspension to End of January

Canada has prolonged its temporary removal of federal excise tax on aviation fuels until January 31, 2027. The measure sets the tax rate at zero for leaded and unleaded aviation gasoline, as well as other aviation fuels.

According to a government announcement, the suspension saves 11 Canadian cents per liter on leaded avgas and 10 cents per liter on unleaded avgas. Other aviation fuel is reduced by 4 cents per liter.

Starting February 1, the tax will be reinstated at half its normal rate. The phased approach means 5.5 cents per liter on leaded avgas, 5 cents on unleaded avgas, and 2 cents on other aviation fuel through March 31. Full rates are planned to return on April 1, as outlined in draft amendments.

The aviation fuel exemption is one part of a broader suspension covering gasoline and diesel. Canada estimates the extension will provide about $2.9 billion in additional tax relief, bringing total relief for the 2026-27 fiscal year to $5.3 billion.

The original suspension began in April after Middle East conflict disruptions raised global oil prices. The initial plan took effect April 20 and was to expire September 7. Federal excise taxes are generally collected from manufacturers or wholesalers and built into retail prices.

The suspension was later included in Bill C-30, which implements measures from Canada's Spring Economic Update. The bill received Royal Assent on June 19 and temporarily eliminated the federal excise tax on aviation fuels along with reductions for gasoline and diesel, according to the Finance Department.