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Tax and Revenue Administration
Alberta Indian Tax Exemption Program
Information Circular
AITE-3R7


Last Updated: February 6, 2017
Produced by: Alberta Treasury Board and Finance, Tax and Revenue Administration
For more information: tra.revenue@gov.ab.ca

AITE-3R7 / February 2008

The Tobacco Tax Amendment Regulation (December 15, 2011) implements changes to Alberta's tobacco marking requirements. They come into effect April 1, 2012. For more information, see Special Notice Vol. 3 No. 14, Changes to Tobacco Marking Requirements. Tobacco tax publications are in the process of being updated to reflect the new stamping regime.

NOTE: This Information Circular is intended to explain legislation and provide specific information. Every effort has been made to ensure the contents are accurate. However, if a discrepancy should occur in interpretation between this Information Circular and governing legislation, the legislation takes precedence.

The Government of Alberta recognizes that many First Nations people and communities in the province prefer not to describe themselves as Indians/Indian bands. These terms have been used where necessary to reflect their legal meaning in the federal Indian Act.

ALBERTA INDIAN TAX EXEMPTION PROGRAM INFORMATION CIRCULAR:
EXEMPTIONS UNDER THE AITE PROGRAM

This information circular is intended primarily for exempt sale retailers of tobacco or fuel or registered operators under the Tourism Levy Act who sell those products or accommodation exempt from Alberta tax or the tourism levy to eligible Indian consumers. The topics are:

 

Fuel and Tobacco Tax Exemptions

  1. Retailers of tobacco or fuel wanting to provide eligible Indian consumers exemptions under the AITE program must be:
    • located on an Indian reserve in Alberta, or
    • a bulk fuel dealer or a propane distributor who delivers the fuel to eligible Indian consumers located on an Indian reserve in Alberta.
Tourism Levy Exemptions
  1. Operators of accommodation wanting to provide the AITE from the tourism levy to eligible Indian consumers must be:
    • providing the accommodation on an Indian reserve in Alberta, and
    • registered with TRA under the Tourism Levy Act.

  2. Operators of accommodation on a reserve should refer to the tourism levy series of information circulars, TL-1 to TL-5, for information on registration and collection of the tourism levy.

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Retailers of Fuel or Tobacco

Registration

  1. If a retailer of tobacco or fuel wants to sell tobacco or fuel exempt from tax to eligible Indian consumers the retailer must apply to TRA for registration. If a retailer wants to register more than one location, a separate application must be completed for each location. Before approving a retailer's registration, TRA will send the retailer an agreement for signature. The agreement will set out the terms and conditions for the registered retailer and must be signed and returned to TRA. When TRA has signed the agreement the retailer will be sent a letter approving the retailer's registration as an “exempt sale retailer” and a copy of the signed agreement.

  2. No retailer can sell tobacco or fuel exempt from tax unless TRA has approved the retailer's registration as an exempt sale retailer.

Refusal to Register

  1. TRA may refuse to register a retailer as an exempt sale retailer where the retailer has contravened:
    • the Fuel or Tobacco Tax Acts or the regulations under the Acts;
    • any condition imposed by the Act on the retailer;
    • an Alberta Act or regulation that imposes any tax;
    • a law in another jurisdiction that governs the sale of tobacco or fuel, or the levying of tax on tobacco or fuel in that jurisdiction; or
    • the retailer is not dealing at arm's length with a person who has contravened one of the prohibitions noted above.

Suspension of Registration

  1. An exempt sale retailer's registration may be suspended or cancelled if TRA is satisfied the exempt sale retailer has contravened:
    • the Fuel or Tobacco Tax Acts or the regulations under the Acts,
    • any other Act or regulation of Alberta that imposes a tax, or
    • any term or condition imposed by the Act on the exempt sale retailer.
  1. TRA may also impose additional conditions on any exempt sale retailer as a condition of continuing to be registered.

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Sale of Tobacco Exempt of Tax

  1. There are a number of requirements for all retailers selling tobacco in Alberta:

    • retailers must purchase all their tobacco for re-sale to consumers from wholesalers who have an Alberta tobacco tax licence;
    • retailers must buy, sell, or possess only cigarettes, tobacco sticks or fine-cut tobacco marked for sale in Alberta (red tear strips and stamps with the words:

      Canada Duty Paid.Droit Acquitte.Alberta;
    • unless a retailer is licensed as a wholesaler, a retailer cannot sell tobacco to anyone who the retailer believes is re-selling the tobacco; and
    • unless the sale is a tax exempt sale made by an exempt sale retailer as described below, a retailer must charge the tobacco tax.

  2. There are a number of additional requirements specific to exempt sale retailers selling tobacco and providing an exemption of tobacco tax to eligible Indian consumers. The requirements include:
    • exempt sale retailers must purchase “black stock” tobacco (cigarettes, tobacco sticks or fine-cut tobacco) from wholesalers with an Alberta tobacco tax licence;
    • an exempt sale retailer cannot sell black stock tobacco to anyone who is not eligible to purchase tobacco exempt from tax under the AITE program.

  3. Exempt sale retailers sell black stock cigarettes, tobacco sticks and fine-cut tobacco tax exempt under the AITE program only to eligible Indian consumers. Black stock product is marked with a peach tear tape and black text reading
    “Canada Duty Paid.Droit Acquitté".
    It is illegal to sell black stock tobacco to anyone not entitled to purchase the product exempt of tax.

  4. Exempt sale retailers must sell cigarettes, tobacco sticks and fine-cut tobacco to consumers with tax included if they are marked with a red tear strip or stamp with black lettering containing the words:

    Canada Duty Paid.Droit Acquitte.Alberta

    It is also illegal to sell any other cigarettes, tobacco sticks or fine-cut tobacco without collecting the tax.

Sale of Fuel Exempt of Tax

  1. Exempt sale retailers sell fuel exempt from tax under the AITE program to eligible Indian consumers. Fuel sold tax exempt is clear gasoline or diesel fuel and propane.

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Rules and Procedures for Making Tax Exempt Sales

  1. Applicants for registration as an exempt sale retailer have a choice of two methods to process their tax-exempt transactions: an electronic system called “AITE Direct”, or a paper-based system. To be eligible to use AITE Direct a registered retailer must use TRA Certified software. The procedure for processing all transactions for each system is outlined below.

    Point of Sale System (AITE Direct)

  1. To purchase tobacco or fuel exempt from Alberta tax, eligible Indian consumers must present their AITE card at the time of purchase. AITE Direct automatically checks the card to ensure it is valid. If the card has been cancelled or is expired AITE Direct will not allow the tax exemption.

  2. When an Indian is purchasing tobacco products AITE Direct automatically verifies his/her age. If the Indian is under 18 years of age AITE Direct will not permit the sale of tobacco to the person. Federal law prohibits the sale of tobacco to anyone under 18 years of age, including Indians with an AITE card.

  3. An exempt sale retailer must not sell to an individual Indian or Indian band more than the following limited amounts each week, unless the exempt sale retailer is satisfied the product is not for resale. If the sale is made then AITE Direct will produce a voucher. The reason for purchasing the product must be given on the voucher. In some cases TRA may require an exempt sale retailer to obtain explanations on vouchers for sales of quantities of tobacco or fuel below these limits.

Tobacco

•  400 cigarettes (two cartons);
•  400 tobacco sticks; or
•  400 grams of fine-cut tobacco, snuff or chewing tobacco.

Fuel

•  300 litres of fuel.

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  1. AITE Direct automatically compares the quantity being purchased with the limit of two cartons of cigarettes, 400 tobacco sticks or 400 grams of fine-cut tobacco, snuff or chewing tobacco or 300 litres of fuel per week. If the purchase exceeds the limit, AITE Direct requires an over-limit explanation code and automatically prints a voucher. The eligible Indian consumer must sign the voucher. The signature on the voucher must be compared to, and match, the signature appearing on the customer's AITE card. Excess tobacco and fuel sales require an explanation from the purchaser for the purchase.

  2. Tax exemptions are not to be provided on fuel or tobacco that the purchaser intends for resale. If the exempt sale retailer has reason to believe that a customer intends to re-sell the product the retailer must refuse to make the sale. If a tax-exempt sale has been made and later it is determined the product was re-sold, the retailer should call TRA as soon as possible providing the:

•  customer's name,
•  customer's identification number,
•  date of the purchase, and
•  reason the retailer believes the product was re-sold.

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Paper Based System

  1. To purchase tobacco or fuel exempt from Alberta tax from an exempt sale retailer an eligible Indian consumer must present his/her AITE card. The card must be checked against the cancelled card list provided by TRA to confirm its validity before making a sale. This list should be checked as a matter of course, particularly if the customer is a stranger to the retailer. In addition, the expiry date on the card must be checked to ensure the card is valid.

  2. If an Indian is buying tobacco products the retailer must ensure he/she is over 18 years of age. Federal law prohibits the sale of tobacco to anyone, including Indians with a valid AITE card, under 18 years of age.

  3. An exempt sale retailer must at the time of sale prepare a voucher for each sale, whether for fuel or tobacco by making an imprint of the AITE card using a card imprinter. The exempt sale retailer must also complete the remainder of the voucher at the time of sale with: the code for the product, quantity of the product sold and the amount of tax exemption provided on the sale using the tax rate chart provided by TRA. The eligible Indian consumer must then sign the voucher. The signature on the voucher must be matched to the signature on the customer's AITE card. The exempt sale retailer keeps one copy of the voucher and submits one copy to TRA with the AITE refund application.

  4. If an error is made while completing a voucher, void the voucher by crossing out the entire voucher.  Write VOID across the face of the voucher.  Complete a new voucher with the correct information and ensure it is signed by the purchaser.  Please attach the VOID voucher to the correct voucher when submitting them with your claim.  Altering any information on the voucher is strictly prohibited.

  5. An exempt sale retailer must not sell to an individual Indian or an Indian band more than the following limit amounts each week, unless the exempt sale retailer is satisfied the product is not for resale. The explanation for purchasing the product must be stated on the voucher. In some cases TRA may require an exempt sale retailer to obtain explanations on vouchers for sales of quantities of tobacco or fuel below these limits.

Tobacco

•  400 cigarettes (two cartons);
•  400 tobacco sticks; or
•  400 grams of fine-cut tobacco, snuff or chewing tobacco.

Fuel

•  300 litres of fuel.

  1. If the card imprinter fails to work, before making the sale the retailer must telephone TRA to obtain an authorization number to be able to hand-write customer identification on the vouchers.

  2. Tax exemptions are not to be provided on fuel or tobacco that the purchaser intends for resale. If the exempt sale retailer has reason to believe that a customer intends to re-sell the product the retailer must refuse to make the sale. If a tax-exempt sale has been made and later it was determined the product was re-sold, the retailer should call TRA as soon as possible providing the:

•  customer's name,
•  customer's identification number,
•  date of the purchase, and
•  reason the retailer believes the product was re-sold.

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Procedures to Claim Refunds for Tax Exempt Sales

    Point of Sale System (AITE Direct)

  1. Registered exempt sale retailers must purchase the tobacco and fuel they sell tax-exempt from a licensed tobacco wholesaler or fuel supplier. Licensed tobacco wholesalers must have permission from TRA to stock and sell black stock. They will only sell black stock to exempt sale retailers registered with TRA. The licensed tobacco wholesalers and fuel suppliers include the Alberta tobacco or fuel tax in the price of the product sold to exempt sale retailers.

  2. TRA obtains details of an exempt sale retailer's daily sales by polling the information contained in the retailer's AITE Direct. The retailer's AITE Direct receives daily updates of cardholder changes and weekly purchases-to-date information about individual cardholders. The exempt sale retailer must ensure he/she has received the daily update. If the file of cardholder changes and purchases-to-date information is not received the retailer should call TRA's Helpdesk immediately.

  3. Each Sunday night TRA totals the daily information polled during the week and, if approved, generates a refund. Where requested by the exempt sale retailer TRA deposits the refund directly into the retailer's bank account.

  4. When vouchers have been produced for tax exempt sales the retailer is required to keep them for a period of four years for inspection by TRA.

  5. Once each month, the exempt sale retailer must submit his/her tobacco and fuel purchase invoices to TRA for cigarettes and fine-cut tobacco. The retailer sends only the invoices for black stock tobacco and invoices relating to purchases of cigars, snuff and chewing tobacco.

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Paper-based System

  1. Registered exempt sale retailers must purchase the tobacco and fuel products they sell tax exempt from a licensed tobacco wholesaler or fuel supplier. Licensed tobacco wholesalers must have permission from TRA to stock and sell black stock. They will only sell black stock to exempt sale retailers registered with TRA. The licensed tobacco wholesalers and fuel suppliers include the Alberta tobacco or fuel tax in the price of the product sold to exempt sale retailers.

  2. The exempt sale retailer must complete an AITE refund application. The period covered by each refund application cannot be less than seven consecutive days. The refund application for tax exemptions is submitted directly to TRA. One refund cheque, including the tobacco and fuel refunds, will be issued for each refund application.

  3. All fuel and tobacco purchase invoices must be included with each refund application. For cigarettes, tobacco sticks and fine-cut tobacco, only the invoices related to black stock tobacco are to be included and invoices for purchases of cigars, snuff and chewing tobacco. The purchase invoices must be reported by supplier code, product code and quantities, not in dollars. In addition, the retailer is required to file with the application a copy of the vouchers that represent the tax exemptions provided for each period.

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Taxable Sales to Suspended Cardholders

  1. An individual's AITE card may be suspended by TRA if he/she have been assessed under either the Fuel or Tobacco Tax Act and the amount assessed has not been paid. Where an AITE card is suspended the card will be removed from the active card list of a retailer using AITE Direct. However, for paper-based retailers the card will appear on the cancelled card list.

  2. Suspended AITE cardholders may purchase fuel and tobacco tax-in from an AITE retailer. If the retailer is selling cigarettes, tobacco sticks or loose tobacco, the retailer must sell only Alberta-marked tobacco. The retailer must produce a receipt for the tax related to each sale, regardless of quantity, and give the receipt to the purchaser.

  3. The receipt must show the name of the purchaser, the date of purchase, the name and location of the retailer, the quantity of fuel or tobacco purchased, and the amount of fuel or tobacco tax included in the purchase price. Once the person has accumulated receipts totalling $20 or more of tax paid, the person may complete a refund application form and submit it together with the receipts to TRA for credit against the outstanding assessment. Once the assessment has been paid, the card suspension will be lifted and the person will receive a replacement AITE card.

Operators of Accommodation

  1. Operators registered with TRA under the Tourism Levy Act are able to provide an exemption from the tourism levy to eligible Indian consumers. The conditions that must be met are:

    • the accommodation must be provided on an Indian reserve,
    • the eligible Indian consumer must present a valid identification card at the time of purchasing the accommodation, and
    • the accommodation must be for the use of the eligible Indian consumer.

  2. The operator must retain information about the name of the eligible Indian consumer purchasing the accommodation, the AITE card used and the card number for inspection by TRA at a later date.

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