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Marine Services Fees
You Asked About... The Marine Navigation Services Fee (MNSF) as Applied to Vessels Engaged in Canada's Coasting Trade
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.
Background
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 17, 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.
Q. 1. Why am I being asked to pay the Marine Navigation Services Fee?
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 in providing marine navigation services (VTS) to commercial ships.
Q. 2. What aids to navigation and VTS services am I being asked to pay for?
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.
Q. 3 What is meant by the Coasting Trade?
Normally, commercial marine activities undertaken in Canadian waters (i.e. Coasting Trade) are reserved to vessels registered in Canada on which all taxes under the Customs Tariff and the Excise Tax Act have been paid. Occasionally, activities of a commercial nature arise in Canadian waters for which there is no suitable Canadian vessel available. In this case, application for a Coasting Trade licence may be made to Revenue Canada to bring a foreign flag or non-duty paid vessel into Canada for purposes of undertaking a well defined marine activity. These vessels are referred to as being engaged in Canadian Coasting trade activities for purposes of the application of the MNSF.
Q. 4. Do all vessels operating in Canada’s Coasting Trade pay the same MNSF fee?
Yes, all foreign flag and non-duty paid vessels engaged in Coasting Trade activities are subject to the same MNSF fee regardless of whether they are operating in the Western Region or Eastern Canada.
Q. 5. Is there a specific MNSF fee that applies to Coasting Trade vessels that are loading and unloading cargo?
No, the diversity of activities in the Coasting Trade dictate that vessels be billed the MNSF based on the Gross Tonnage (GT) of the vessel and not on tonnage loaded or unloaded.
Q. 6. What is the MNSF rate charged to a Coasting Trade vessel?
The current MNSF rate is CDN $0.38 per GT of the vessel. The fee is charged on a monthly basis for each 30-day period for which the Coasting Trade licence is in effect.
Q. 7. Is there a maximum and minimum MNSF fee applicable to Coasting Trade vessels?
Yes, Coasting Trade vessels pay an MNSF fee of CDN $0.38 per GT, to a maximum of 50,000 GT. There is also a minimum fee payable of CDN $25 per vessel per 30 day (monthly) billing period.
Q. 8. Are certain types of vessels engaged in the Coasting Trade exempt from payment of the MNSF?
Yes, the MNSF Regulations exempt the following types of vessels: "government ships", fishing vessels, pleasure craft and barges in the Western Region. As well, vessels that are in a fixed position for 30 day billing periods and vessels operating exclusively in areas where no navigational aids are provided by Coast Guard (CCG) would be exempt from payment of the fee. If there is any doubt as to whether the MNSF applies to a certain type of vessel, the applicant should contact the CCG.
Q. 9. What about Coasting Trade vessels that enter Canadian waters (call Canadian ports) in ballast or for repairs; are they required to pay the MNSF?
Yes, these vessels still make use of CCG navigational aids while in Canadian waters and, therefore, are subject to payment of the MNSF.
Q. 10. How does the Coast Guard know which vessels enter Canada on a Coasting Trade licence?
Revenue Canada Customs sends all Coasting trade applications (Form C-47), letters of authorization and licences (Form C-48) to the CCG. This information is then entered into a billing and information system used for invoicing Coasting Trade vessels.
Q. 11. Will the Coast Guard send an invoice for the MNSF fee?
Yes, the MNSF invoice will be sent directly to the Coasting Trade licence applicant from the Marine Services Fees (MSFBCC) office along with a worksheet describing billing details and an adjustment form which the applicant should use only in the event that there is a change in the status of the vessel being billed.
Q. 12. Will Coasting Trade vessels operating in the Western Region be invoiced the MNSF by Thunder Bay Airport Services Inc.?
No, Coasting Trade vessels in the Western Region are not invoiced by Thunder Bay Airport Services Inc. on behalf of CCG but are invoiced directly from Ottawa by CCG.
Q. 13. How often will I receive an MNSF invoice from the MSFBCC office?
Applicants for Coasting Trade vessels are billed on a monthly basis for every thirty-day period the Coasting Trade licence is in effect.
Q. 14. How do I know what I am being billed for? How do I know the amount of the invoice is correct?
An invoice, along with a worksheet, is sent to the applicant. The worksheet gives a detailed list of the various vessels (including assessed fees) for which the applicant has submitted an application to Revenue Canada for a Coasting Trade licence.
Q. 15. How long do I have to pay the invoice?
The invoice must be paid in full within 30 days of the invoice date. A due date can be found on the invoice. Overdue accounts are charged interest commencing on the 31st day after the issuance of the invoice compounded monthly at the average Bank of Canada rate for the preceding month plus 3%.
Q. 16. Who do I send payments to?
Your payment by cheque, along with a copy of your invoice, should be sent to:
Department of Fisheries and Oceans
Revenue Accounting
200 Kent St., Station 10S047
Ottawa, Ontario
K1A 0E6
Q. 17. Who is responsible for payment of the MNSF on a Coasting Trade Vessel?
The MSFBCC office will invoice the applicant for the Coasting Trade licence on behalf of the vessel owner/operator.
Q. 18. Why is the applicant billed and not the vessel owner?
As the applicant is usually responsible for handling the costs associated with bringing a foreign flag or non-duty paid vessel into the Coasting Trade, and, as the vessel owner/operator is not always specified on the Coasting Trade licence application, the MNSF invoice is sent directly to the licence applicant.
Q. 19. If a Coasting Trade vessel is imported to work outside the 12-nautical mile Canadian Territorial Sea Limit, does it pay the MNSF?
No, because the MNSF is charged to vessels "operating in Canadian waters". For purposes of payment of the MNSF, "Canadian waters" are defined as Canada’s Territorial Sea Limits, which are presently set at 12 nautical miles. When vessels operate beyond this 12-mile limit they are not subject to the MNSF. However, when Coasting Trade vessels venture into "Canadian waters" (call at a Canadian port) for any length of time, and for whatever reason, the fee is applicable.
Q. 20. If a vessel operating on a Coasting Trade licence has already paid for cargo unloaded from a foreign origin, does it still have to pay the MNSF applicable to the Coasting Trade when the licence takes effect?
If a vessel was billed internationally for cargo loaded or unloaded, it may still have to pay the MNSF applicable to vessels operating under a Coasting Trade Licence if the international loading/unloading took place prior to the issuance of a Coasting Trade licence providing both do not occur in the same 30 day period. However, if a vessel operating on a Coasting Trade Licence is also subject to payment of the fee for foreign flag ships in the same 30-day period, the higher of the total fees payable applies or, where the amounts are identical, only the second fee will apply.
Q. 21. What happens if a cruise ship’s Coasting Trade licence expires and it begins a regular international service between Canada and the U.S. How does the MNSF apply in the Western Region?
The cruise ship will pay the applicable MNSF rate for a foreign flag ship in the Western Region each time it enters Canadian waters, to a maximum of 12 times in a twelve month period. In Eastern Canada, it will pay the fee applicable to cruise ships three times in a 30-day period. If the cruise ship’s Coasting Trade licence is still in effect in the same 30-day period that it begins a regular international service, the vessel will pay the greater of the Coasting trade and the international MNSF rate applicable in Eastern Canada or the Western Region.
Q. 22. What happens if Thunder Bay Airport Services Inc. inadvertently invoices a Coasting Trade vessel in the Western Region?
The applicant for the Coasting Trade vessel will be required to pay the difference in the MNSF applicable to Coasting Trade vessels and the amount paid to Thunder Bay Airport Services Inc. based on the Western Region MNSF fee schedule. The applicant/shipping agent for the Coasting Trade vessel should inform Thunder Bay Airport Services Inc. of its status prior to payment of any Thunder Bay Airport Services Inc. issued MNSF invoice so that Thunder Bay Airport Services Inc. can cancel its invoice.
Q. 23. If a vessel leaves the Coasting Trade before the expiration date specified on the licence, does it still pay MNSF for that period?
If a Coasting Trade vessel leaves Canada before the expiry of its temporary entry permit, the MNSF fee is only billed to the applicant for those 30-day periods in which the Coasting Trade licence was in effect and for which the vessel was actually in Canadian waters.
Q. 24. Are Coasting Trade vessels eligible for a PNS (Precision Navigation System) discount?
Yes, Coasting Trade vessels are eligible for the PNS discount based on the same criteria and submission to the MSFBCC office of the same documents used to determine the eligibility of Canadian and other foreign flag vessels. If the Coasting Trade vessel qualifies for the PNS discount on the MNSF fee, this will be automatically applied to the invoice sent to the applicant for this vessel.
Q. 25. If a collecting agent is the applicant for a Coasting Trade vessel, is he/she entitled to bill the vessel as "Other Non Canadian" and collect the 5% administration fee on the transaction?
No. All Coasting Trade vessels operating in Canadian waters are invoiced directly by the the MSFBCC office. If collecting agents are aware that a foreign flag vessel is engaged in Canadian Coasting Trade activities, they should not invoice the vessel.
Q. 26. Why are Coasting Trade Vessels billed differently than other foreign flag vessels?
As Coasting Trade vessels are engaged in a wide range of domestic commercial marine activities and not normally involved in the carriage of cargo, billing the vessel on the same basis as Canadian flag vessels, rather than foreign flag vessels (i.e., per GT), is more equitable and efficient administratively.
Q. 27. Do foreign flag and non-duty paid vessels engaged in the Canadian Coasting Trade pay more or less than Canadian registered vessels?
When a foreign flag vessel is allowed to enter and operate in the Coasting Trade, it is essentially operating as a Canadian vessel. In order for the MNSF to be fairly and equitably applied , vessels in the Coasting Trade are assessed a 30-day fee of $0.38 per GT, which is, considering the differences in the billing periods, identical to the quarterly (3 month) fee of $1.14 per GT charged to Canadian registered vessels.
Q. 28. What happens if a foreign flag or non-duty paid vessel does not come into the Coasting Trade as scheduled according to its application?
If the vessel does not enter the Coasting Trade as scheduled, the applicant must advise the MSFBCC office, in writing, upon receipt of an invoice. The MSFBCC office will then issue a credit, if warranted, for the full fee payable for that particular vessel for the 30-day period. If the MSFBCC office is advised in writing, prior to the issuance of an invoice, no MNSF invoice will be issued to the vessel for that 30-day period.
Q. 29. How are tug and barge combinations operating in the Coasting Trade invoiced the MNSF?
Tug and barge combinations in the Coasting Trade, regardless of physical configuration, are treated as two separate vessels (except in the Western Region where the barge is exempted from payment of the fee), each of which is subject to payment of the fee.
Q. 30. If I want more information on the MNSF, who do I contact?
Requests for adjustments to your invoice or questions related to the application of the MNSF to a Coasting Trade vessel should be directed to the DFO Marine Services Fees Billing, Collection & Compliance Division by telephoning our toll-free number 1-800-563-6295.
This pamphlet is the third in a series prepared by the Canadian Coast Guard.
Other Pamphlets in the Series include:
No. 2 You Asked About… The Marine Navigation Services Fee as Applied to Tonne-Kilometre Operators
No. 5 You Asked About… The Marine Navigation Services Fee as Applied to Foreign Flag Cruise Ships
