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Tax and Revenue Administration
Transportation Fuels - Exemptions and Licences
Information Circular CL-T-3


Last Reviewed: November 3, 2016
Produced by: Alberta Treasury Board and Finance, Tax and Revenue Administration
For more information: tra.carbonlevy@gov.ab.ca

CL-T-3 / October 2016

TRANSPORTATION FUELS - EXEMPTIONS AND LICENCES

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 exemptions from paying the carbon levy on transportation fuels 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). Also discussed is the ability to apply for a licence to purchase fuel exempt from the carbon levy in certain circumstances.

Topics include:


DEFINITION OF TRANSPORTATION FUELS

  1. The term “transportation fuels” is not defined in the Act and the Regulation. It is a term used by TRA to represent fuels such as gasoline, diesel and propane used to generate power by means of an internal combustion or turbine engine for motive purposes, as well as aviation gas, aviation jet fuel, locomotive diesel and includes additives to those fuels. Propane used for heating purposes is not included in the definition of transportation fuels. Information specific to aviation gas, aviation jet fuel and locomotive diesel are discussed in their own information circulars.


  2. Where marked transportation fuels are discussed below, it does not include propane for motive purchases, as only marked gasoline and marked diesel are available for sale in Alberta.

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CARBON LEVY EXEMPTION CERTIFICATES AND OTHER EVIDENCE OF EXEMPTION

  1. The Act and the Regulation allow consumers to apply for a carbon levy exemption certificate to purchase transportation fuels exempt from the carbon levy. The exemption certificates are issued by TRA.


  2. A consumer is entitled to purchase transportation fuels exempt from the carbon levy if:

    • the consumer provides, at the time of purchase, a carbon levy exemption certificate or other prescribed evidence of exemption; and

    • the fuel is intended for a prescribed purpose or use.

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Carbon Levy Exemption Certificates and Other Evidence of Exemption to Purchase Clear Transportation Fuels

Who May Purchase Clear Transportation Fuel Exempt From Carbon Levy

  1. Consumers may purchase clear transportation fuels exempt from the carbon levy from an exempt-sale vendor in situations including the following:

    1. the clear transportation fuel is used by an Indian as defined by the Indian Act (Canada) or an Indian band as defined by the Indian Act (Canada);

    2. the clear transportation fuel is used by the Government of Canada;

    3. the clear transportation fuel is used by the armed forces of another country; or

    4. the clear transportation fuel is not put into a fuel system that produces heat or energy, and is not flared or vented, when used:

      1. as a raw material in an industrial process that produces another fuel;

      2. as a raw material in an industrial process that produces another substance that is not a fuel; or

      3. as a solvent or diluent in the production or transport of crude bitumen or other substances.

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Exemption Certificates and Other Evidence of Exemption

Indian or Indian Band

  1. An Indian or Indian band with an active Ministerial identification card (Alberta Indian Tax Exemption (AITE) card) on or before January 1, 2017 is not required to make a separate application for a carbon levy exemption certificate. The existing AITE card will be treated as a carbon levy exemption certificate under the Act and the Regulation.

    Where an Indian or Indian band does not have an AITE card on or before January 1, 2017, they may apply for an AITE card to purchase clear transportation fuels exempt from the carbon levy. The rules on eligibility and the procedures for establishing and maintaining eligibility are provided in Information Circular AITE-2, Tax-Exempt Purchases Made by Indians and Indian Bands.


  2. An AITE card will be issued to Indians who are at least 16 years of age or to Indian bands whose reserves are in Alberta or whose offices are in Alberta.


  3. To be exempt from paying the carbon levy on the use of clear transportation fuels by an Indian or Indian band, the clear transportation fuels must be purchased on, or delivered to, a reserve, the Garden River settlement, or Heart Lake. More information on the carbon levy exemptions for purchases made by an Indian or Indian band can be found in Information Circular AITE-2, Tax-Exempt Purchases Made by Indians and Indian Bands.

Government of Canada

  1. To purchase clear transportation fuels exempt from the carbon levy, the Government of Canada must provide to the exempt-sale vendor an exemption certificate in the same form and manner used by the Government of Canada to purchase clear fuel exempt of fuel tax under the Fuel Tax Act. More information on the sale and purchase of tax-exempt fuel by the Government of Canada can be found in Information Circular FT-4, Sale of Tax-Exempt Fuel.

Armed Forces of Another Country

  1. Armed forces of another country stationed in Alberta may purchase clear transportation fuels exempt from the carbon levy by providing the same documentation they provide to the exempt-sale vendor when they purchase clear fuel exempt of fuel tax under the Fuel Tax Act. More information on the sale and purchase of tax-exempt fuel by the armed forces of another country can be found in Information Circular FT-4, Sale of Tax-Exempt Fuel.

Other Consumers

  1. Eligible consumers may apply to TRA for a carbon levy exemption certificate to purchase clear transportation fuels exempt from the carbon levy by completing and submitting to TRA the Carbon Levy Fuel User Exemption Application Form (AT5102).


  2. Where TRA approves the application, a carbon levy exemption certificate will be issued. The exemption certificate will contain an approval number and will identify the type of fuel(s) that may be purchased exempt from the carbon levy.

Carbon Levy Exemption Certificates and Other Evidence of Exemption to Purchase Marked Transportation Fuels

Who May Purchase Marked Transportation Fuel Exempt from Carbon Levy

  1. Consumers may apply to TRA for a carbon levy exemption certificate to purchase marked transportation fuels exempt from the carbon levy from an exempt-sale vendor in the following situations:

    1. the marked transportation fuel is used by the consumer in the operation of a specified gas emitter if the emissions from the marked transportation fuel are direct emissions as defined in the Specified Gas Emitters Regulation;

    2. the marked transportation fuel is used by the consumer in an oil and gas production process before 2023; or

    3. the marked transportation fuel is used by a farmer for farming operations in Alberta. See paragraph 19 for existing farmers who will not have to apply for a new carbon levy exemption certificate.

  2. Any fuel, including propane for motive purposes, used in the operation of an specified gas emitter facility or in an oil and gas production process before 2023, is exempt from the carbon levy, except for clear gasoline and clear diesel. To be exempt from paying the carbon levy on the use of gasoline or diesel in the operation of a specified gas emitter or in an oil and gas production process before 2023, marked gasoline or marked diesel must be used.

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Exemption Certificates and Other Evidence of Exemption

Specified Gas Emitters and Production Process

  1. Eligible consumers may apply to TRA for a carbon levy exemption certificate to purchase transportation fuels exempt from the carbon levy by completing and submitting to TRA the Carbon Levy Fuel User Exemption Application (AT5102).


  2. If the transportation fuels are used by a consumer in the operation of a specified gas emitter, the consumer is also required to complete Carbon Levy Fuel User Schedule A − SGER Facility (AT5109) and attach it to the application form.


  3. If the transportation fuels are used by a consumer in an oil and gas production process before 2023, the consumer is also required to complete Carbon Levy Fuel User Schedule B − Oil and Gas Production Process (AT5110) and attach it to the application form.


  4. Where TRA approves the application, a carbon levy exemption certificate will be issued. The exemption certificate will contain an approval number and will identify the type of fuel(s) that may be purchased exempt from the carbon levy.

Farmers

  1. To be eligible to purchase marked gasoline or marked diesel exempt from the carbon levy, a farmer must have an Alberta Farm Fuel Benefit (AFFB) number. Where a farmer has an AFFB number on or before January 1, 2017, the farmer’s AFFB number is deemed to be a carbon levy exemption certificate. In those cases the farmer does not need to complete an application.

    However, if the farmer does not have an AFFB number on or before January 1, 2017, they will need to obtain an AFFB number by completing and submitting an AFFB application to Alberta Agriculture and Forestry at the address shown on the form. Alberta Agriculture and Forestry will review the application and may issue an AFFB number if satisfied the applicant is eligible for the AFFB benefits.

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Expiration of a Certificate

  1. A carbon levy exemption certificate expires on the earliest of:

    • the expiry date on the certificate (if shown);

    • the date the certificate holder ceased to be entitled to purchase the fuel exempt from the carbon levy;

    • if the certificate holder is a corporation, the date the holder:

      • amalgamates with another corporation;

      • is wound up, liquidated or dissolved; or

      • is subject to any proceedings under the Companies’ Creditors Arrangement Act (Canada);

    • if the certificate holder is a partnership, the date there is a change in the partners of the partnership;

    • if the certificate holder is the operator of a joint venture, the date there is a change in the operator of a joint venture; and

    • the date the certificate is cancelled by TRA.

  2. Except as discussed in the next paragraph, no person that has been issued a carbon levy exemption certificate is permitted to allow another person to use the exemption certificate. Similarly, no person is permitted to use a carbon levy exemption certificate issued in the name of another person.


  3. An Indian band that has been issued an exemption AITE card is permitted to allow another person to use the AITE card if:

    • the person is an authorized representative of the Indian band;

    • the person is using the exemption AITE card to purchase fuel for and on behalf of the Indian band; and

    • the person and the Indian band comply with any conditions placed on the exemption AITE card.

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Refusal to Issue a Certificate

  1. TRA may refuse to issue a carbon levy exemption certificate in certain circumstances, which may include situations where:

    • TRA determines that the applicant is not exempt from paying the carbon levy on fuel;

    • TRA determines that some or all of the information provided on the application is false or misleading;

    • the applicant holds a valid carbon levy exemption certificate in respect of the same fuel;

    • TRA determines that the applicant has contravened the Act and the Regulation or any other enactment that provides for the imposition of a tax; or

    • the applicant has an overdue debt to the Crown.

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Suspension or Cancellation of a Certificate

  1. TRA may suspend or cancel a carbon levy exemption certificate in certain circumstances, which may include situations where:

    • TRA determines that the holder of the carbon levy exemption certificate is no longer exempt from paying the carbon levy on fuel,

    • TRA determines that information provided to TRA by the holder of the carbon levy exemption certificate is false or misleading,

    • the carbon levy exemption certificate has been lost, stolen, destroyed or is unusable,

    • TRA believes that the carbon levy exemption certificate has been sold to, or is in the possession of or being used by, a person other than the person to whom it was issued or an authorized representative,

    • TRA determines that the holder of the carbon levy exemption certificate has contravened the Act and the Regulation or any other enactment that provides for the imposition of a tax, or

    • the holder of the carbon levy exemption certificate has an overdue debt to the Crown.


  2. Where TRA has suspended or cancelled a carbon levy exemption certificate, the holder of the certificate will be notified of the action taken. Exempt-sale vendors will also be notified of the suspension or cancellation of the certificate.


  3. A consumer who uses transportation fuels for a purpose or use for which the consumer would have been entitled to purchase the transportation fuels exempt from the carbon levy had the consumer provided a carbon levy exemption certificate or other evidence of exemption at the time the fuel was purchased may be able to receive a rebate of the carbon levy paid.

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LICENCE FOR CARBON LEVY EXEMPTION

  1. The Act and the Regulation allow recipients that are fuel vendors or suppliers who would regularly be entitled to a carbon levy refund or credit to apply for a licence to purchase transportation fuels exempt from the carbon levy. The licence for carbon levy exemption is issued by TRA.


  2. A licence holder is entitled to purchase transportation fuels exempt from the carbon levy if the licence holder provides, at the time of purchase, a licence for carbon levy exemption.

Who is Eligible to Apply for a Licence

  1. An entity that is a fuel vendor or supplier may apply to TRA for a licence to purchase transportation fuels exempt from the carbon levy from an exempt-sale vendor in situations including:

    • Where an entity is, or will be, ordinarily exporting from Alberta at least 80% of the gasoline or diesel purchased in Alberta in a calendar year.

    • Where propane for motive purposes is used in certain circumstances including:

      • exported from Alberta in bulk;

      • sold for use at a facility pursuant to the Specified Gas Emitter Regulation (SGER);

      • sold for use in an exempt oil and gas production process before 2023;

      • sold to an exempt consumer for use as a raw material, diluent, or solvent;

      • sold to another approved remitter or licence holder; or

      • stored in a designated offsite storage facility.

  2. Recipients do not require a licence and will not be charged the carbon levy if they purchase transportation fuels from a refinery or terminal, designated as such under the Fuel Tax Act, for direct export from Alberta if they provide documentation satisfactory to TRA that the transportation fuel is destined for export from Alberta. Examples include bills of lading and a US “Entry Summary” (form 7501). The “Entry Summary” form must:

    • have an original U.S. Customs Department stamp and original signature for each truckload of fuel removed; and

    • include volume, product and bill of lading or ticket as stated by the U.S. Customs Department.

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Application for a Licence

  1. Eligible recipients may apply to TRA for a licence to purchase transportation fuels exempt from the carbon levy by completing and submitting to TRA the Carbon Levy Licence Application for Fuels Other Than Gasoline and Diesel (AT5103).


  2. Recipients that ordinarily export from Alberta at least 80% of the gasoline or diesel purchased in Alberta, in a calendar year, may apply to TRA for a licence for carbon levy exemption by completing and submitting to TRA the Carbon Levy Licence Application for Gasoline and Diesel Exporters (AT5104).


  3. Where TRA approves the application, a licence for carbon levy exemption will be issued. The licence will contain an approval number and will identify the type of fuel(s) that may be purchased exempt from the carbon levy.

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Responsibility of a Licence Holder

  1. A licence holder may purchase fuel to which the licence applies exempt from carbon levy from approved direct remitters. Once a recipient is issued a licence, the recipient or licence holder in this case will be subject to requirements including filing, reporting, remittance of carbon levy and recordkeeping as a direct remitter in accordance with the Act and the Regulation.

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Use of a Licence

  1. Generally, no person that has been issued a licence for carbon levy exemption is permitted to allow another person to use the licence. Similarly, no person is permitted to use a licence issued in the name of another person.

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Refusal to Issue a Licence

  1. TRA may refuse to issue a licence, to an applicant, for carbon levy exemption in certain circumstances, which may include situations where:

    • TRA determines that the applicant is not regularly entitled to refunds or credits under the Act and the Regulation;

    • TRA determines that some or all of the information provided on the application is false or misleading;

    • the applicant holds a valid licence in respect of the same fuel;

    • TRA determines that the applicant has contravened the Act and the Regulation or any other enactment that provides for the imposition of a tax; or

    • the applicant has an overdue debt to the Crown.

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Suspension or Cancellation of a Licence

  1. TRA may suspend or cancel a licence for carbon levy exemption in certain circumstances, which may include situations where:

    • TRA determines that the holder of the licence is no longer regularly entitled to refunds or credits under the Act and the Regulation;

    • TRA determines that information provided by the licence holder is false or misleading;

    • the licence has been lost, stolen, destroyed or is unusable;

    • TRA believes that the licence has been sold to, or is in the possession of or being used by a person other than the person to who/whom it was issued or an authorized representative, or

    • TRA determines that the holder of the licence has contravened the Act and the Regulation or this Regulation or any other enactment that provides for the imposition of a tax.

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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