Taxes & Rebates - Frequently Asked Questions (FAQs)

Fuel Tax Act - Budget 2015 Change
- Fuel Tax Rate Increase

Index

 

What changes have occurred with respect to fuel tax rates?

As part of Budget 2015, Alberta will increase its fuel tax rates effective 12:01 a.m. on March 27, 2015. The new rates are as follows:

  • Gasoline and diesel: $0.13 per litre (formerly $0.09)
  • Renewable diesel and renewable alcohol: $0.13 per litre (formerly $0.09)
  • Other prescribed fuels, including bunker fuel, kerosene, methanol and condensate, used to generate motive power by means of an internal combustion or turbine engine: $0.13 per litre (formerly $0.09)
  • Liquefied petroleum gas (propane): $0.094 per litre (formerly $0.065)

Fuel tax applies to renewable diesel and renewable alcohol. Fuel tax also applies to the above-noted other prescribed fuels if they are used to generate motive power, such as for transportation purposes. There continues to be no tax on these other prescribed fuels if they are used for heating or another non-motive purpose. Similarly, propane will remain non-taxable if purchased from a non-motive fuel dispensing system for a non-motive purpose, such as operating a barbeque.

Back to Top

Have the tax rates changed for all types of fuel?

The rate for aviation fuel remains unchanged at $0.015 per litre. Effective 12:01 a.m. on November 1, 2015, Alberta increased its tax rate on locomotive fuel from $0.015 per litre to $0.055 per litre.

Back to Top

Why has the Alberta government increased the fuel tax rates?

The fuel tax provides a reliable and stable source of revenue for the province. With this in mind, increasing fuel tax supports Alberta’s decision to reduce its reliance on resource revenue. In addition, fuel tax is paid by both businesses and individuals.
Despite the $0.04 per litre tax increase, Alberta will still have the lowest tax rate on gasoline and diesel among provinces. For more information about tax plan decisions, please see the section related to fuel tax in the Budget 2015 Fiscal Plan - Tax Plan.

Back to Top

How long has it been since the fuel tax rates have increased?

The fuel tax rates on gasoline and diesel in Alberta have not changed since 1991. For more information about tax plan decisions, please see the section related to fuel tax in the Budget 2015 Fiscal Plan - Tax Plan.

Back to Top

How do Alberta’s fuel tax rates compare to the rates in other jurisdictions?

For a comparison of fuel tax rates across Canada, please refer to the Alberta Government Tax Plan.

Back to Top

How do the tax rate changes affect the marked fuel program?

The exemptions of tax on marked fuel, including the exemptions provided under the Tax Exempt Fuel User (TEFU) and Alberta Farm Fuel Benefit (AFFB) programs administered by Alberta Treasury Board and Finance, Tax and Revenue Administration (TRA), are capped at $0.09 per litre. Therefore, marked fuel used in unlicensed vehicles and equipment that was previously tax-out for eligible off-road activities or farming operations, and in licensed farm vehicles, will now be taxed at $0.04 per litre.

Full direct remitters should charge and remit $0.04 per litre on fuel that is dyed after 12:01 a.m. on March 27, 2015. The forms used for calculating the incremental amount of tax as a result of the cap on marked fuel have been updated and are available on our website.

Marked fuel vendors (that are not also full direct remitters) currently approved by TRA to dye fuel should charge $0.04 per litre on fuel that is dyed after 12:01 a.m. on March 27, 2015, and TRA will process rebrand claims accordingly. 

Other registered marked fuel vendors should charge $0.04 per litre on shipments of marked fuel received after 12:01 a.m. on March 27, 2015. Marked fuel should not be sold to consumers tax-in at the new rate until after the respective fuel was purchased by the vendor tax-in at the new rate. Accordingly, the new tax rate of $0.04 per litre on marked fuel should not be charged to consumers on any pre-existing marked fuel inventory held as at 12:01 a.m. on March 27, 2015.

Back to Top

I am an IFTA Carrier.  How do the tax rate changes impact me?

IFTA Carriers may continue to use the current IFTA Quarterly Tax Return for the period January 1, 2015 to March 31, 2015, which reflects the old rates. If you pay tax at the new rates on fuel purchased between March 27, 2015 and March 31, 2015 and wish to make an adjustment to your return for the additional amount of tax paid, please make a written request to TRA.  TRA may ask you to provide documentation to support your request and reserves the right to audit the adjustment. TRA will update subsequent IFTA Quarterly Tax Returns to reflect the new fuel tax rates.

Back to Top

I am a bulk fuel dealer or retailer.  What do I charge for current clear gasoline and diesel or propane inventories that have been purchased at the former tax rates?

It is important that the above-noted fuels not be sold to consumers tax-in at the new rates until after the respective fuel was purchased by the vendor tax-in at the new rates.  Accordingly, the new tax rate of $0.13 per litre on gasoline, diesel and other prescribed fuels, and the new rate of $0.094 on propane, should not be charged to consumers on any pre-existing fuel inventory held as at 12:01 a.m. on March 27, 2015.

Back to Top

What tax rate is applied to fuel that is acquired at the former tax rate and is now in transit and/or not off-loaded into my facilities prior to the tax rate change?  Do these purchases need to be re-billed?

Clear gasoline and diesel inventories acquired at the former tax rate of $0.09 per litre should be delivered and billed with tax included at the former rate.  Inventory acquired after March 26, 2015 at the new rate of $0.13 per litre for clear fuel and $0.04 per litre for marked fuel should be delivered and billed with tax included at the new rate.

Similarly, propane acquired at $0.065 per litre should be delivered and billed with tax included at the same rate.  Propane acquired after March 26, 2015 at $0.094 per litre should be delivered and billed with tax included at the new rate.

Back to Top

How do the tax rate changes affect monthly reporting requirements?

As the change in rate is effective within the month, full direct remitters, propane distributors, renewable fuel resellers and fuel importers will be required to file two separate returns for March 2015 for each type of fuel.  The first return will be for the period March 1, 2015 to March 26, 2015 in respect of fuel tax at the respective rate prior to March 27, 2015. The second return will be for the period March 27, 2015 to March 31, 2015, and should reflect the new rates, including the new rate of $0.04 per litre on marked fuel, if applicable.

All returns for March 2015 must be received by TRA no later than April 28, 2015.

The remittance requirements for the respective fuel tax have not changed.

Back to Top

I am an exporter of fuel.  How do the tax rate changes impact me?

Fuel exported from Alberta by those who are not full direct remitters is taxed in Alberta at the time the fuel leaves a refinery or registered terminal.  The new rates will apply to any fuel that leaves a refinery or registered terminal after 12:01 a.m. on March 27, 2015. If the fuel is exported and used outside of Alberta subsequent to 12:01 a.m. on March 27, 2015, the fuel tax paid will be refunded, on application to TRA, at the rate that was paid on the fuel.

On receipt of a refund application, TRA reviews the application and may ask for additional information to determine the applicant's eligibility and correct claim amount. Before any refund may be made, TRA must be satisfied that the recipient has paid the tax to the other jurisdiction.

The tax rate changes have no impact on full direct remitters who export fuel tax-out to customers located outside of Alberta for use outside Alberta. To be sold exempt of tax the fuel must be delivered by the direct remitter or by an independent common carrier to a location outside Alberta. If the customer is not an appointed tax collector for the jurisdiction, the direct remitter must charge the tax of the jurisdiction to the customer and remit the tax to that jurisdiction.

Back to Top

I am a farmer who has been using propane exempt of tax in my farming operations. Is my propane now taxable?

No. The new tax rate for propane is 9.4 cents per litre, but there is no cap on the exemption of tax on propane. Therefore, a farmer may continue to use propane exempt of tax in farming operations.

Back to Top

How do the tax rate changes affect the Alberta Indian Tax Exemption (AITE) program?

There is no change to the AITE program. Eligible AITE consumers will continue to be able to purchase fuel tax-out from AITE exempt sale retailers on reserve.


I am an AITE exempt sale retailer.  How do the tax rate changes impact me?

An AITE exempt sale retailer may apply to TRA for a refund of fuel tax paid when the fuel is sold tax-out to eligible AITE consumers, provided that the fuel was purchased by the retailer tax-in. Similarly, an AITE exempt sale retailer that also sells propane may apply to TRA for a refund of the tax paid by the retailer on all propane sold tax-out to eligible AITE consumers.  Information packages were sent on March 26, 2015 to all AITE exempt sale retailers to inform them of the refund process. 

Back to Top


I am an eligible AITE consumer.  Has the 300 litre per week purchase limit changed?

No, the 300 litre per week purchase limit has not changed. A person who purchases in a calendar week more than 300 litres of clear tax-exempt fuel must advise the vendor that the weekly limit has been exceeded and inform the vendor how the fuel will be used.

Back to Top

I am a consumer.  I noticed that the price of gasoline and/or diesel at the pump seemed to increase immediately upon the announcement that the fuel tax rates had changed.  Is this correct?

Bulk fuel purchasers and retailers have been advised that the higher tax rates should not be applied to any pre-existing inventory of gasoline and diesel on hand as at 12:01 a.m. on March 27, 2015.  Rather, the new tax rates are to be applied to shipments of fuel received by the retailer tax-in at the new rates subsequent to 12:01 a.m. on March 27, 2015.  Possible factors that could impact the price of gasoline or diesel at the pump at a particular point in time include the level of inventory a retailer had on hand at the time of the tax rate change announcement, the location of the gas station, or market forces.

Back to Top

Further Questions

If you have any questions that are not answered above, you may email TRA at TBF.fueltax@gov.ab.ca.

 

Page last updated:  April 2, 2017