Marine Services Fees
You Asked About... The Marine Navigation Services Fee As Applied To Tonne-Kilometre Operators
Caution and Disclaimer
While all possible care was taken to insure consistency with the Marine Navigation Services Fee Schedule in this pamphlet produced by the Canadian Coast Guard (CCG), the Fee Schedule shall take precedence in the event of a discrepancy between the contents of this pamphlet and the Fee Schedule.
The Marine Navigation Services Fee (MNSF) was officially introduced by the Minister of Fisheries and Oceans on June 1, 1996 as a user fee for navigational services provided by the Canadian Coast Guard. Subsequently revised on July 1, 1997, and again on October 1, 1998, the MNSF is assessed on all vessels operating in Canadian waters with the exception of fishing vessels, "government ships" and pleasure craft as defined by the MNSF Fee schedule. It was also decided that, effective October 1, 1998, the existing fee structure would be frozen (i.e. unchanged) for three years. Responses to questions below are based on provisions contained in the "Fee Schedule – Fees to Be Paid For Marine Navigation Services Provided By the Canadian Coast Guard" effective October 1, 1998.
What is the Marine Navigation Services Fee (MNSF) and why am I paying it?
Answer to question 1:
The Marine Navigation Services Fee (MNSF) is based on the premise that those who benefit directly from publicly funded services should contribute in part to the cost of those services. The MNSF recovers a portion of the total costs incurred by the Canadian Coast Guard (CCG) in providing navigational aids and Vessel Traffic Services (VTS) to commercial ships.
What aids to navigation and VTS services am I being asked to pay for?
Answer to question 2:
Aids to navigation for which you are being asked to pay a portion of the cost include visual aids such as lightstations, buoys, channel markers and day beacons; radar aids including reflectors, beacons and RACONs; aural aids including fog horns, bell and whistle buoys and Loran-C. Vessel Traffic Services (VTS) include the monitoring of vessel movements via VHF radio communications and shore-based radar surveillance equipment, the issuing of the Notice to Mariners and Notices to Shipping, the establishment of compulsory traffic routes and the provision of weather forecasts.
What vessels are billed according to the cargo tonne-kilometre formula?
Answer to question 3:
Canadian registered and Non-Canadian vessels classified as a "bulk carrier"(including self-unloaders) or a "containership" are billed the MNSF according to the cargo tonne-kilometre formula.
Can tankers, barges and tug-barge combinations be invoiced the MNSF according to the tonne-kilometre formula?
Answer to question 4:
No, tankers, barges and tug-barge combinations, regardless of physical configuration or flag of registry, are not eligible to be invoiced the MNSF on a tonne-kilometre basis.
Are domestic "bulk carriers" and "containerships" operating in Canadian waters in the Western Region invoiced the MNSF according to the tonne-kilometre formula?
Answer to question 5:
No, only Canadian registered "bulk carriers" and "containerships" in Eastern Canada (i.e. Newfoundland, P.E.I., Nova Scotia, New Brunswick, Quebec, Ontario and Manitoba) are eligible to be invoiced the MNSF according to a tonne-kilometre formula. And all Non-Canadian registered “bulk carriers” and “containerships” operating in the Great Lakes are eligible to be invoiced the MNSF according to the tonne-kilometre formula. This formula does not apply to domestic vessels in the Western Region.
Do vessels being billed the MNSF on a tonne-kilometre basis pay less as a group than when they were billed prior to July 1, 1997?
Answer to question 6:
No, the conversion from an annual (quarterly) fee to a tonne-kilometre fee in 1997-98 was revenue neutral for this group of vessels.
How do I qualify to have my vessels invoiced the MNSF on a cargo tonne-kilometre basis?
Answer to question 7:
You must write to DFO’s Marine Services Fees, Billing, Collection and Compliance (MSFBCC) office requesting that your vessels be billed in this manner. You will then be given further instructions to provide documentation to support the classification of your vessel as a "bulk carrier" or "containership". This includes a completed Declaration Letter, a vessel specifications list and a photo of your vessel. The MSFBCC office will then review the information provided, make a determination and notify the owner/operator in writing.
As a tonne-kilometre operator, how will the Coast Guard invoice me for the MNSF?
Answer to question 8:
Tonne-kilometre operators are billed on a quarterly basis. Within a week after the end of a billing quarter, the MSFBCC office will mail you a Request for Payment (RFP) form consisting of a Summary page and Vessel Trip Details page with pertinent billing information included. These forms are to be completed and submitted by you, along with your payment, to DFO Revenue Accounting within 30 days of receipt of the Request for Payment.
Does the Request for Payment form have to be completed in English or in French?
Answer to question 9:
Copies are sent to operators in both official languages. Operators can complete either and return it to Revenue Accounting.
What is the purpose of the Client Number on the RFP?
Answer to question 10:
The one to five digit client number which is found to the right of the Invoice Number has been previously assigned by the Coast Guard to identify domestic operators for purposes of payment of the MNSF. When directing a query to the MSFBCC office regarding your account, please quote this number.
What does the Invoice Number tell you?
Answer to question 11:
The invoice number consists of 12 characters. The first three (MTK) identify the invoice as a Canadian or Non-Canadian invoice using the tonne-kilometre formula; the next six characters identify the billing quarter and year; and the last three characters are a unique number assigned to the operator by the MSFBCC office. When directing inquiries on an RFP to Revenue Accounting, please quote this number.
What kind of detailed billing information is required on the RFP?
Answer to question 12:
The MSFBCC office requires that you provide details on all vessel trips, as well as transshipments in a billing quarter, including vessel names, cargo types, trip dates, origins, destinations, cargo tonnages, distances and fee calculations, among others.
What vessel trips have to be reported by tonne-kilometre operators?
Answer to question 13:
Vessel trips between two Canadian ports and between a Canadian port south of 60° North Latitude and an international port are subject to payment of the MNSF and must be reported in detail on the RFP form.
What if my vessel loads cargo at one port and discharges at two different ports? How many trips does this constitute and what tonnages do I use in the tonne-kilometre calculations?
Answer to question 14:
In this case, you would report two vessel trips – the first between the origin and the first destination using total tonnage, and the second between the first destination and the second destination using the total tonnage less the tonnage unloaded at the first destination.
What is meant by "Gross MNSF" on the tonne-kilometre RFP?
Answer to question 15:
The Gross MNSF is the amount of MNSF payable per vessel trip prior to the application of any discounts.
What is meant by the "Net MNSF" on the tonne-kilometre RFP?
Answer to question 16:
The Net MNSF is simply the Gross MNSF minus the PNS discount.
As a tonne-kilometre operator, what amount do I have to pay?
Answer to question 17:
For tonne-kilometre operators, the billing unit is the vessel trip. The MNSF payable will vary by distance, tonnage and commodity. The operator must calculate the MNSF amount using the tonne-kilometre formula:
Tonne-kilometres = $0.007 × (cargo in tonnes × distance in kilometres) ÷ 100
One of three commodity specific formulae depending on the cargo:
- "Other Cargo" (ceiling) = $0.16 × cargo in tonnes
- "Gypsum" (ceiling) = $0.15 × cargo in tonnes
- "Aggregates" (ceiling) = $0.05 × cargo in tonnes
Of the two, the operator should use the formula that yields the lower MNSF amount for billing purposes.
Do ceiling rates used in the combination of the MNSF vary according to commodity?
Answer to question 18:
Yes, in the Request for Payment form, the tonne-kilometre operator is required to define the cargo as either gypsum (gyp), aggregates (agg) or other (oth) for each vessel trip.
Are vessels billed according to the cargo tonne-kilometre formula eligible for the 5% discount for on board operating Precision Navigation Systems (PNS) meeting the Coast Guard’s interim standard?
Answer to question 19:
Yes. Owners/operators of all vessels billed on a tonne-kilometre basis seeking the 5% PNS discount must first apply and submit the required PNS systems documentation to the MSFBCC office for consideration and determination of the eligibility of the vessel. The MSFBCC office will notify tonne-kilometre operators in writing if their ship(s) qualify for the PNS discount. Only those vessels issued a PNS Number by the MSFBCC office will qualify for the discount after November 1, 1999.
How do I measure the distance between origin and destination ports for the purpose of calculating the MNSF?
Answer to question 20:
For the purpose of calculating the MNSF, a Distance Table originally developed by the Canadian Shipowners’ Association is used as the official source of distances between origin and destination points. The Distance Table is constantly updated by MSFBCC with the help of Transport Canada. A copy can be obtained from DFO’s MSFBCC office by calling 1-800-563-6295.
What if there is a dispute regarding distances between an origin and a destination point?
Answer to question 21:
Any questions or discrepancy concerning the distance appearing in the Distance Table between an origin and a destination should be brought to the attention of the MSFBCC Office for resolution. Updated Distance Tables will be sent via email to all tonne-kilometre operators on a quarterly basis or upon request.
Are any other exemptions from payment of the MNSF available to vessels being billed according to the tonne-kilometre formula?
Answer to question 22:
In the event that a Canadian or Non-Canadian "bulk carrier" or "containership" is inactive in a billing quarter, the vessel will not be required to pay the MNSF. If no billable trips (i.e. where cargo is being carried) are made by a vessel in a billing quarter, this vessel would not appear on the RFP form submitted to Revenue Accounting.
What happens if all vessels of a tonne-kilometre operator are inactive in a billing quarter?
Answer to question 23:
If all its vessels are inactive in the billing quarter, the tonne-kilometre operator should still submit the RFP form received from the MSFBCC office with the words "No Activity in the Billing Quarter" written on the RFP Details form.
How is the MNSF applied to tonne-kilometre operators on vessel trips to/from the Canadian North?
Answer to question 24:
The map included below depicts billable and non-billable trips of vessels being invoiced according to the tonne-kilometre formula. In this regard:
- Vessel trips to/from southern Canada to/from North of 60 degrees North latitude (for example Montreal-Iqualuit) are subject to payment of the MNSF.
- Vessel trips to/from a Canadian point south of 60 Degrees North Latitude to/from a foreign point (for example Thunder Bay–Hampton Roads, Montreal-Rotterdam) are subject to payment of the MNSF.
- Vessel trips exclusively between any points North of 60 Degrees (for example Iqualuit-Coral Harbour) are not subject to payment of the MNSF.
- Vessel trips exclusively between remote ports (for example Rankin Inlet–Baker Lake) are not subject to payment of the fee.
- Vessel trips to/from points North of 60 Degrees to/from foreign locations (for example Nanisivik–Antwerp) are not subject to payment of the fee.
Currently, there is a moratorium on all movements to or from the Canadian North (60° North Latitude) which would be subject to the payment of MNSF.
How does the Coast Guard define a transshipment?
Answer to question 25:
A transshipment involves cargo carried by a second or subsequent ship without intermediate processing in order to reach its final destination.
Will I be charged the MNSF on the carriage of cargo that previously arrived at a port and, in the interim, underwent no processing before delivery to a final destination?
Answer to question 26:
No. If your vessel is the second or subsequent carrier of a cargo on which the MNSF fee has been previously paid, you will not be charged the MNSF. You must, however, provide information on the movement, confirming that the cargo has been correctly labelled as a "transshipment".
What supporting documents do I have to provide if I claim a transshipment?
Answer to question 27:
In order to claim a transshipment, supporting documentation must be sent to the MSFBCC office along with the completed RFP form. This documentation can take the form of a:
- Cargo bill of lading
- Load/Unload report
- Declaration of transshipment by a port authority
- Shipper Declaration including shipper name, address, phone, fax, and contact person
Who is responsible for calculating the applicable taxes for individual vessel trips?
Answer to question 28:
It is the responsibility of the tonne-kilometre operator to calculate and submit all applicable taxes for all vessel trips reported on the RFP.
Who do I contact if I am unsure as to the application of federal and provincial taxes to vessel trips?
Answer to question 29:
If there is any doubt as to what taxes apply to individual vessel trips, it is the responsibility of the tonne-kilometre operator to clarify the taxes applicable to the vessel trip with Revenue Canada.
Who do I send payments of the MNSF to?
Answer to question 30:
Payment of the fee is to be sent to:
Fisheries and Oceans Accounting HUB
301 Bishop Dr.
The address can also be found in the top left corner of your MNSF invoice and your Statement of Account.
What happens if I don't pay my MNSF fee billable for vessel trips within the 30-day period?
Answer to question 31:
Upon receipt of the completed Request For Payment forms from the operator, DFO Revenue Accounting will apply interest charges on overdue fees based on the total of fee payable calculated and submitted by the operator. Interest is charged on overdue accounts, commencing on the 31st day after the RFP invoice date, compounded monthly at the average Bank of Canada rate for the preceding month, plus 3%.
Are there alternatives to the RFP method of billing for tonne-kilometre operators?
Answer to question 32:
Yes, tonne-kilometre operators can use the Tonne-Kilometre upload process to report detailed vessel trip information in lieu of completing the RFP forms.
What is the Tonne-Kilometre Upload Process?
Answer to question 33:
The Tonne-Kilometre Upload Process is an electronic format of the RFP (Detail) form that is provided in an Excel spreadsheet and emailed to firstname.lastname@example.org on a quarterly basis.
How do I start using the Tonne-Kilometre Upload Process?
Answer to question 34:
Simply request the Tonne-Kilometre file formatting spreadsheet from the MSFBCC office at email@example.com.
Will the MNSF billing information submitted by the tonne-kilometre operator be audited?
Answer to question 35:
The MSFBCC Office presently reviews vessel trip information for errors and MNSF amounts to ensure that the correct rate has been used. If any errors or omissions are found, the operator will be notified.
If I want more information on the MNSF, the application of the tonne-kilometre billing method, who do I contact?
Answer to question 36:
For more information, please contact the DFO Marine Services Fees Billing, Collection, and Compliance Division at 1-800-563-6295.
This pamphlet is the second in a series prepared by the Canadian Coast Guard.
Other Pamphlets in the Series include:
- Number 1: You Asked About... The Marine Navigation Services Fee (MNSF) as Applied to Canadian Registered Vessels
- Number 3: You Asked About… The Marine Navigation Services Fee as Applied to Vessels Engaged in Canada’s Coasting Trade
- Number 4: You Asked About… The Marine Navigation Services Fee as Applied to Foreign Flag Cargo Vessels Engaged in International Trade
- Number 5: You Asked About… The Marine Navigation Services Fee as Applied to Foreign Flag Cruise Ships
- Number 6: You Asked About… The Marine Navigation Services Fee as Applied to Foreign Flag "Other Non-Canadian Ships"
- Number 7: You Asked About… Precision Navigation Systems Discount as Applied to the Marine Navigation Services Fee
- Number 8: You Asked About... The Icebreaking Services Fee
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