Contract work performed by a contractor for a farmer
Coloured fuel oil, which is exempt from fuel tax, may be acquired or used in specific situations only. For example, it may be acquired or used to supply the propulsion engine of farm machinery, but only while the machinery is used for farming work by a person whose principal occupation is farming.
If a contractor uses farm machinery to perform contract work for a farmer (for example, combining and tillage), coloured fuel oil may not be used to supply the propulsion engine of the farm machinery concerned. This is because the contractor is performing a service contract and not farming work within the meaning of the Fuel Tax Act.