and Revenue Administration
Products Produced in an Industrial Process
Special Notice Vol. 11 No. 11
||May 3, 2017
||Alberta Treasury Board and Finance, Tax and
|For more information:
Vol. 11 No. 11 / May 2017
SPECIAL NOTICE - APPLICATION OF THE CARBON LEVY TO PRODUCTS PRODUCED IN AN INDUSTRIAL PROCESS
NOTE: This special notice 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 special notice and governing legislation, the legislation takes precedence.
This notice explains the application of the carbon levy to products produced in an industrial process, that contain fuels or fuels and substances that are not fuels, under the Climate Leadership Act (Act) and the Climate Leadership Regulation (Regulation), which are administered by Alberta Treasury Board and Finance, Tax and Revenue Administration (TRA).
In general, a consumer is exempt from paying the carbon levy on fuel that is used as a raw material in an industrial process. In certain cases, the products produced in an industrial process are reasonably expected not to be combusted. For example, fuels may be combined with non-fuel substances, such as water, to create products that are not reasonably expected to be put into a fuel system that produces heat or energy, such as anti-freeze. Alternatively, fuels may be combined to create other products, such as those sold as solvents.
Although the seller of a product produced in an industrial process is generally required to charge the carbon levy on the proportion of fuel in that product in accordance with the Act and Regulation, there is no intention that the carbon levy be charged on the sale of such a product if the product is reasonably expected not to be combusted, flared or vented. This means that the carbon levy does not apply to a product produced in an industrial process if there is a reasonable expectation that the product will not be put into a fuel system that produces heat or energy, and will not be flared or vented. Accordingly, a seller of a product that satisfies this test is not required to collect and remit the carbon levy on the sale of the product, and should not require the purchaser to provide any evidence of exemption at the time the product is sold.
In general, TRA will consider there to be a reasonable expectation that a product produced in an industrial process will not be put into a fuel system that produces heat or energy, and will not be flared or vented, if the product is not ordinarily intended to be used in a fuel system that produces heat or energy, is not ordinarily flared or vented, and is not being sold or represented as a product suitable for use in a fuel system that produces heat or energy.
If a product that satisfies the above test is subsequently put into a fuel system that produces heat or energy, or if the product is subsequently flared or vented, the consumer will be considered to have rebranded the product and the carbon levy will apply. In such circumstances, the consumer of the product must report and remit the carbon levy payable on the proportion of fuel contained in the product. For additional information, please refer to the Self-Assessor Carbon Levy Remitter Return Instruction Guide.
Please note that this notice only applies to products produced in an industrial process. This notice does not apply to single fuels, notwithstanding that there may be a reasonable expectation that a single fuel will not be flared or vented and is not sold or represented as being suitable for use in a fuel system that produces heat or energy. Such single fuels may include, for example, methanol sold as a de-icing fluid or condensate sold as a diluent. The seller of single fuels is still required to collect and remit the carbon levy on the sales unless the purchaser provides evidence of exemption.
For additional information on the Carbon Levy, please visit our Carbon Levy Overview 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.