Dyed diesel is now legal on U.S. roads. What are the rules in Canada?

Dyed diesel, which is essentially the same as regular diesel fuel but colored red to identify its off-road use, has now been cleared for general use on U.S. roads due to soaring gas prices. This change was made possible by an executive order signed by President Donald Trump, waiving the off-road requirement for tax-free diesel. Previously, using red-dyed diesel on roads and highways in Canada was illegal and strictly enforced at the provincial and territorial levels through specific fuel tax legislation.

Canadian farmers, who heavily rely on diesel for their equipment, expressed welcome for similar changes in Canada, as diesel prices have been exceptionally high. However, the Department of Finance has clarified that federal fuel excise tax rules do not provide special treatment for coloured or dyed diesel fuel. As a result, Canadian provinces and territories can still enforce their own tax rules and restrictions on coloured fuel, including its use on road vehicles.

Legal experts warn that bringing red-dyed diesel across the Canadian border and using it in road vehicles could lead to fines, which vary depending on the jurisdiction. In Ontario, the Fuel Tax Act imposes fines ranging from $200 to $1,000 per offence, while in Saskatchewan, contravening the Fuel Tax and Road Use Charge Act can result in fines up to $10,000 for individuals and $50,000 for corporations.