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Tax and Revenue Administration
Natural Gas (Heating Purposes) - Refunds and Rebates
Information Circular CL-NG-4


Last Reviewed: December 22, 2016
Produced by: Alberta Treasury Board and Finance, Tax and Revenue Administration
For more information: tra.carbonlevy@gov.ab.ca

CL-NG-4 / December 2016

NATURAL GAS (HEATING PURPOSES) − REFUNDS AND REBATES

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.

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.

This Information Circular explains carbon levy refunds and rebates to recipients and consumers under the Climate Leadership Act (the Act) and the Climate Leadership Regulation (the Regulation), which are administered by Alberta Treasury Board and Finance, Tax and Revenue Administration (TRA).

Topics include:

 

REFUND OF CARBON LEVY ON NATURAL GAS (HEATING PURPOSES)

  1. Under the natural gas distribution system carbon levy on natural gas (heating purposes) is generally remitted to TRA by the natural gas distributors which recover carbon levy paid from billing the consumers. If the natural gas distributor is not the natural gas service provider that is providing natural gas service to the consumer the natural gas distributor will recover carbon levy paid from the natural gas service provider that bills the consumer.


  2. A recipient who is not a consumer may apply to TRA for a refund or a credit for all or part of carbon levy paid by the recipient for natural gas in situations including when:

    • the recipient has paid carbon levy; and

    • one of the following circumstances has occurred:

      • natural gas was provided exempt from carbon levy to a holder of a carbon levy exemption certificate (for more information on carbon levy exemptions, please see Information Circular CL-NG-3, Natural Gas − Exemptions);

      • a verifiable quantity of natural gas was stolen or destroyed;

      • a purchaser of natural gas that is the recipient;

        • is unable to sell the natural gas due to contamination;

        • is unable to recover carbon levy paid on natural gas from the person that sold natural gas to the recipient; and

        • provides satisfactory evidence that the natural gas was disposed of in a manner that did not contravene an enactment and did not involve combustion or venting;

      • natural gas was provided and billed to a person that purchased the natural gas on credit and all or a portion of the amount of the debt in respect of the sale is a bad debt;

      • the recipient remitted to TRA an amount of carbon levy that exceeded the amount that the recipient was required to remit when natural gas was provided;

      • the recipient who purchased natural gas;

        • remitted an amount of carbon levy that exceeded the amount that the recipient was required to pay to the person that provided natural gas to the recipient; and

        • is unable to recover the excess amount from the person that provided natural gas to the recipient;

  3. A consumer may apply to TRA for a refund or a credit for all or part of carbon levy paid by the consumer for natural gas in situations including when:

    • carbon levy paid by the consumer exceeded the amount the consumer was required to pay and the consumer is unable to recover the excess amount from the vendor;

    • the consumer purchased natural gas and the consumer:

      • is unable to use natural gas due to contamination;

      • is unable to recover carbon levy paid on natural gas from the vendor; and

      • provides satisfactory evidence to TRA that natural gas was disposed of in a manner that did not contravene an enactment and that did not involve combustion or venting.

  4. Where losses of natural gas are unverifiable, TRA may, on application by a claimant, provide a refund of all or part of carbon levy paid by the claimant on the lost natural gas.

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BIOMETHANE CREDIT

Definitions
  1. “Biomethane contract” means a written contract, between a recipient that is a natural gas service provider and a consumer, that:

    • provides for the sale of natural gas after December 31, 2016 by the recipient to the consumer;

    • specifies the notional biomethane content in the natural gas to be sold under the contract;

    • provides that a portion of the consideration payable under the contract for natural gas will be attributable to the purchase of the notional biomethane content specified in the contract regardless of the actual amount of biomethane, if any, sold; and

    • does not provide that the portion of the consideration attributable to the purchase of the notional biomethane content specified in the contract will increase or decrease based on the actual amount of the biomethane, if any, sold.

  2. “Notional biomethane content”, in relation to natural gas sold or to be sold under a biomethane contract, means the amount of biomethane that is deemed by the contract to be sold, regardless of the actual amount of biomethane, if any, sold.

Biomethane Credit

  1. A natural gas service provider must provide a biomethane credit to a consumer in respect of a sale, within Alberta, of natural gas, in the amount determined in accordance with the formula in paragraph 7 below, if:

    • the sale is made under a biomethane contract;

    • the amount of biomethane that is deemed by the contract to be sold is placed into a natural gas distribution system, all or part of which is located within Alberta, or a transmission pipeline within Alberta;

    • the amount of biomethane referred to above has not been sold to any other consumer; and

    • the consumer is not exempt from paying the carbon levy on natural gas.

  2. The amount of the biomethane credit to be provided for a billing period is determined by the formula:

A x B

where

A is the amount of biomethane that is deemed by the contract to be sold to the consumer in the billing period;

B is the carbon levy rate for natural gas, at the time the natural gas is sold (click here for the carbon levy rate for natural gas).

  1. The biomethane credit provided in respect of a sale must be provided at the time the natural gas is sold.

 

Refund of Biomethane Credit

  1. A recipient may apply to TRA for a refund of a portion of the carbon levy remitted by the recipient to TRA if the recipient has:

    • provided a consumer, who was entitled to a biomethane credit, with a biomethane credit;

    • provided a biomethane credit to a consumer in an amount determined according to the formula in paragraph 7; and

    • remitted carbon levy payable by the consumer to TRA without deduction of the biomethane credit.

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PROCESS FOR APPLICATION OF REFUND

  1. Generally, an entity must register with TRA as a claimant before applying for a refund of carbon levy paid on the natural gas. To register as a claimant with TRA, complete the appropriate Carbon Levy Claimant Registration form available TRA's Carbon Levy Publications and Forms page.

    However, an entity that is already registered as a direct remitter with TRA does not need to register as a claimant. For information on registering as a direct remitter, see Information Circular CL-NG-1, Natural Gas (Heating Purposes) − Registration.


  2. An application for a refund of carbon levy, other than a refund related to a bad debt, must:

    • be made in the form and manner specified by TRA;

    • include the amount of carbon levy to be refunded; and

    • except for natural gas that may be stolen or destroyed under paragraph 12, be received by TRA not later four years after the end of the calendar year in which the circumstance giving rise to a claim for a refund has occurred.

  3. An application for a refund of carbon levy relating to natural gas that was stolen or destroyed must be received by TRA within one year after the date the natural gas was stolen or destroyed.


  4. On receipt of a refund application, TRA will review the application and TRA may ask for additional information to determine the claimant’s eligibility. Claimants are to maintain all invoices and any other records and documents required to prove the claim amount. Records relating to a refund must be kept for four years from the end of the calendar year in which the refund was paid.


  5. If TRA determines that the claimant is entitled to a refund, TRA will pay the refund equal to the amount of carbon levy paid under the Act by the claimant on the amount of the natural gas eligible for a refund.


  6. The amount of refund TRA may pay for a biomethane credit is equal to the amount of the biomethane credit that was provided to the consumer determined by the formula in paragraph 7 above.


  7. If TRA refuses in whole or in part an application for a refund or credit, TRA will give to the claimant a notice of disallowance specifying the amount of the disallowance and the reasons for it.

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REFUND FOR BAD DEBT AND THE APPLICATION PROCESS

  1. “Bad debt” means a debt owing by a purchaser to a recipient that the recipient has deducted in computing and reporting the recipient’s income for the current or preceding taxation year for the purposes of the Income Tax Act (Canada).


  2. An entity must register with TRA as a claimant before applying for a refund of carbon levy paid on the natural gas for bad debt. To register as a claimant with TRA, complete form AT5130 - Natural Gas Retailer − Bad Debt Carbon Levy Claimant Registration.

    However, an entity that is already registered as a direct remitter with TRA does not need to register again as a claimant. For information on registering as a direct remitter, see Information Circular CL-NG-1, Natural Gas (Heating Purposes) − Registration.


  3. An application for a refund of carbon levy in respect for bad debt must:

    • be made in the manner and form specified by TRA;

    • include the amount of carbon levy to be refunded; and

    • be received by TRA within four years after the end of the taxation year in which the bad debt was deducted in computing and reporting the claimant’s income for that taxation year for the purposes of the Income Tax Act (Canada).

  4. On receipt of an application, TRA will review the application and may request additional information to determine the claimant’s eligibility. Claimants are to maintain all invoices and any other records and documents required to prove the claim amount.


  5. If TRA determines that the claimant is entitled to a refund, TRA will pay the refund in the amount determined in accordance with the formula:

A / B x C

where

A is the amount of the bad debt at the time of the application to a maximum of the amount of B;

B is the original amount of the debt at the time of sale;

C is the amount of carbon levy that was remitted or paid relating to the sale.

  1. For the purposes of determining the amount of carbon levy owing in respect of a bad debt, at the time a claimant collects a portion of a debt owing by a purchaser to the claimant, the amount collected is deemed to include an amount of carbon levy proportionate to the amount of carbon levy in the debt immediately before the time of collection.


  2. If a claimant subsequently collects full or partial payment in respect of a bad debt for which the claimant has received a refund of carbon levy, the claimant must repay to TRA the portion of the carbon levy refunded to the claimant determined in accordance with the formula:

A / B x C

where

A is the amount of debt collected to a maximum of the amount of B;

B is the amount of the bad debt at the time of the application for a refund;

C is the amount of the refund received from TRA.

  1. For the purposes of determining the amount of the refund, if a claimant pays a fee to another person for the collection of accounts receivable on the claimant’s behalf, the fee does not reduce the amount collected for the purposes of determining the claimant’s bad debt with respect to those accounts receivable.

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REBATE OF CARBON LEVY ON NATURAL GAS

  1. A consumer may apply to TRA for a rebate for all or part of carbon levy paid by the consumer on natural gas if the natural gas was used by a consumer for a purpose or use for which the consumer would have been entitled to purchase the natural gas exempt from the carbon levy, had the consumer provided a carbon levy exemption certificate or other evidence of exemption at the time the natural gas was purchased.


  2. TRA will not pay a refund for an amount of carbon levy paid if the recipient or the consumer is entitled to a rebate for the amount.

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PROCESS FOR APPLICATION OF REBATE

  1. To apply for a rebate of carbon levy paid on natural gas, an entity must first register with TRA as a claimant. To register as a claimant with TRA, complete form AT5136 − Consumer Carbon Levy Claimant Registration.


  2. An application for a rebate of carbon levy paid for natural gas must:

    • be made in the form and manner specified by TRA;

    • include the amount of carbon levy to be refunded;

    • except for a rebate to an Indian or Indian Band, be in respect of each calendar quarter; and

    • be received by TRA not later four years after the end of the calendar year in which the fuel was purchased.

  3. On receipt of an application, TRA will review the application and may request additional information to determine the claimant’s entitlement. Claimants are to maintain all invoices and any other records and documents required to prove the claim amount.


  4. If TRA determines that the claimant is entitled to a rebate, TRA will pay the rebate equal to the amount of carbon levy paid by the claimant on the amount of the natural gas eligible for the rebate.


  5. An application for a rebate by an Indian or an Indian band may be made at any time.


  6. If TRA refuses an application for a rebate in whole or in part, TRA will provide the claimant with a notice of disallowance specifying the disallowed amount and the reasons for the disallowance.

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Questions

For additional information on the Carbon Levy, please see TRA's Carbon Levy Publications and Forms page.

For general questions about the Climate Leadership Plan, please refer to the Climate Leadership Plan website at http://www.alberta.ca/climate-leadership-plan.aspx.

For questions about the administration of the carbon levy program, please email us at TRA.CarbonLevy@gov.ab.ca.



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