Tax and Revenue Administration Fuel Tax Act Information Circular FT-12R1

FT-12R1/ March 2008

ALBERTA FUEL TAX ACT INFORMATION CIRCULAR - FUEL SELLERS

(Effective April 1, 2007)

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:

• Definition of Fuel Seller
• Registration of Fuel Sellers
• Sale of Fuel
  • Clear Fuel
  • Marked Fuel
• Sales to Ineligible Consumers
• Export of Fuel
• Import of Fuel
• Reporting Requirements
• Refund of Tax
• Rebrand of Fuel
• Records
• Invoicing Requirements
  

DEFINITION OF FUEL SELLER

1. The term “fuel seller” is not defined in the Fuel Tax Act (Act) or its Regulation.  It is a term used by Alberta Finance and Enterprise, Tax and Revenue Administration (TRA), to represent any person (other than a liquid petroleum gas [LPG] seller or distributor) who carries on an activity listed in the next paragraph.  Under the Act, the word “sell” means to sell or otherwise supply fuel with or without receiving consideration.  A fuel seller that meets the criteria for a full direct remitter or an activity based direct remitter will register under separate requirements as found in Information Circular FT-11, Direct Remitters.  Propane sellers should refer to the Propane (PRO) information circular series.
   
   
2. A fuel seller must register under the Act if that seller carries on any of the following activities:
   • selling  fuel for the purpose of resale,
   • selling aviation fuel,
   • selling fuel exempt from tax (clear or marked),
   • rebranding fuel for sale at a lower tax rate,
   • exporting fuel from Alberta in bulk, or
   • selling bunker fuel, kerosene, methanol or condensate.

REGISTRATION OF FUEL SELLERS

3. Persons who conduct any of the activities set out in the previous paragraph are required to register with TRA for each activity they perform.
   
   
4. A fuel seller selling marked fuel will normally fall into one of three business categories:
   
   
   • The fuel seller who sells marked fuel that he owns at the time of sale is required to register with TRA using the “Independent Fuel Seller Registration” (form AT4907). These fuel sellers are identified as “Approved Fuel Sellers – Independent” on TRA’s website.
     
     
   • The fuel seller sells marked fuel owned by a full direct remitter at the time of sale. This fuel seller basically performs a delivery function and should not register with TRA.  The full direct remitter must register on this fuel seller’s behalf and provide a list of all the direct remitter’s related bulk fuel locations (BFLOs),including the fuel seller’s location. These sellers are identified as “Approved Fuel Sellers – Full Direct Remitter” on TRA’s website.
     
     
   • The fuel seller sells fuel that he owns at the time of sale and also sells fuel owned by a full direct remitter at the time of sale. These locations are registered using both the “Independent Fuel Seller Registration” (form AT4907) and the “Fuel Tax Registration” (form AT4905).  These sellers can be both Approved Fuel Sellers – Independent and Approved Fuel Sellers – Full Direct Remitter on TRA’s website.
     

5. TRA reviews the application for registration and approves the applicant of the specific activities the applicant is registered to conduct.
   
   
6. A fuel seller who sells clear or marked fuel exempt from tax to consumers will also be registered by TRA as an exempt-sale vendor. Refer to Information Circular FT-13, “Exempt-Sale Vendors”.
   
   
7. TRA may refuse to register an applicant as a fuel seller, to renew the registration of a fuel seller, or may cancel or suspend the registration if the fuel seller
   
   
   • has contravened the Fuel Tax Act or Regulation, another Alberta law, or a law of another jurisdiction governing the collection and payment of tax; or
     
     
   • is not dealing at arm's length with a person whose registration has been suspended or cancelled or whose application for registration has been refused.
     

The applicant will be notified by TRA of the decision and the reasons for the refusal will be stated in the notification.

8. If the person is not satisfied with TRA's decision relating to the registration, the person may file a Notice of Objection. For more information, refer to Information Circular FT-9, “Audits, Objections and Waivers of Penalties and Interest”.

SALE OF FUEL

Clear Fuel

Gasoline and Diesel Fuel

9. Fuel sellers purchase clear gas and diesel with the tax included.  Tax paid may be recovered from the purchaser when the fuel is sold.  If the fuel seller is a registered exempt-sale vendor and sells fuel to an eligible consumer (see Information Circular FT-13, “Exempt Sale Vendor” for more information), the fuel seller may apply to TRA for a refund of the tax paid.

Aviation Fuel

10. Fuel sellers purchase aviation fuel (any fuel refined or produced specifically for use in an aircraft) with the tax included. The tax paid by the seller is recovered when the aviation fuel is sold. The seller may apply to TRA for a tax refund if the aviation fuel is sold for international flights (see Information Circular AV-1, "Aviation Fuel Tax - International Flights" for more information).

Bunker Fuel, Kerosene, Methanol and Condensate

11. Bunker fuel, kerosene, methanol and condensate are not taxable when purchased by a fuel seller. These fuels are sold tax out to the consumer. A consumer will report and pay tax directly to TRA only if the bunker fuel, kerosene, methanol or condensate is used by the consumer to generate motive power in an internal combustion or turbine engine. The consumer will use the Consumer Return (AT2080) for reporting the tax.

Locomotive Fuel

12. When a fuel seller sells locomotive fuel to a railway, no tax will be charged on the diesel fuel. The fuel seller will claim a refund of the tax paid by rebranding to locomotive fuel at a zero tax rate.

    Marked Fuel

13. Registered fuel sellers purchase marked gasoline and diesel exempt from tax and sell the marked fuel to persons registered with TRA to possess marked fuel.  For more information about sale of tax-exempt fuel and exemption certificates, refer to information circulars FT-13, “Exempt-sale Vendor” and FT-3, “Fuel Tax Exemption Certificates”.
    
    
14. Fuel sellers can sell marked fuel for resale only to registered exempt-sale vendors or fuel sellers registered with TRA to sell or possess marked fuel. All entities registered to sell marked fuel will be listed on the TRA's website.
    
    
15. Effective March 31, 2007 the previous 30-day grace period for selling marked fuel to a consumer was eliminated.  Beginning April 1, 2007 a consumer must possess a valid fuel tax exemption certificate to be eligible to purchase or possess marked fuel.  A fuel seller who sells marked fuel to a consumer is required to verify the consumer’s eligibility at the time of sale to the consumer (see Information Circular FT-13, “Exempt-Sale Vendor”).  A consumer’s eligibility can be confirmed using TRA’s Tax-Exempt Fuel Sales (TEFS) system located in the Tax and Revenue Administration Client Self Service (TRACS) portal at http://www.finance.gov.ab.ca/tracs/index.html on the Alberta Finance and Enterprise website.

SALES TO INELIGIBLE CONSUMERS

16. If an exempt-sale vendor sells tax-exempt fuel without obtaining proof of the purchaser's eligibility, or knows, or ought to know, the fuel will not be used for an authorized purpose, both the exempt-sale vendor and the purchaser are jointly and severally liable to pay TRA the amount of the tax the purchaser would have been required to pay on the fuel.
    
    
17. If the sale of tax-exempt fuel by a fuel seller includes the Alberta Farm Fuel Distribution Allowance (AFFDA) and the fuel seller has not obtained proof of the farmer's eligibility for the tax exemption and AFFDA grant, or knows, or ought to know, the fuel will not be used for eligible farming operations, both the exempt-sale vendor and the farmer are jointly and severally liable to pay TRA the amount of the tax on the fuel and the amount of the grant provided.
    

EXPORT OF FUEL

18. Fuel sellers who own the fuel may export fuel from Alberta in bulk and not charge the customer the tax if the fuel seller delivers the fuel, or hires a common carrier to deliver the fuel, to a customer outside Alberta and the fuel is used outside Alberta.  However, fuel sellers must ensure the tax of the jurisdiction to which the fuel is delivered is paid to that jurisdiction.   The fuel seller may claim a refund of the Alberta tax paid by completing the “Independent Fuel Seller – Fuel Tax Adjustment” (form AT372) and related schedules and submitting the forms to TRA.  Refer to Information Circular FT-6, “Tax Refunds”, for more information.

IMPORT OF FUEL

19. A fuel seller who imports fuel into Alberta for resale or use is required to register as an activity-based direct remitter using the “Fuel Tax Registration Form” (form AT4905).  Refer to Information Circular FT-11, “Direct Remitters”.

REPORTING REQUIREMENTS

20. A fuel seller who owns the marked fuel when it is sold must report the marked fuel sales to TRA using the TEFS system.  The TEFS report is to be filed electronically via Internet or through File Transfer Protocol (FTP) by the owner of the fuel when it is sold.  All marked fuel transactions have to be filed no later than 28 days after the end of the month in which the sales were made.  The fuel seller must reconcile the purchase inventory and sale of marked fuel it owns.  Marked fuel sales made by a seller who sold fuel on behalf of a full direct remitter are to be included in the TEFS reports filed by the full direct remitter.  A full direct remitter is required to reconcile marked fuel transactions on the monthly “Generic Fuel Tax Return”.
    
    
21. A fuel seller who sells clear fuel owned by a full direct remitter at the time of sale does not report the sale.  The full direct remitter is to report the sale on the generic fuel tax return.

REFUND OF TAX

22. A fuel seller that sells its own clear fuel product exempt from tax to eligible purchasers should report the sale to TRA to obtain a refund of the tax paid. The fuel reseller will claim the refund using the “Independent Fuel Sellers – Fuel Tax Adjustments” (form AT372 ) and applicable schedules. Refer to Information Circular FT-6, “Tax Refunds” for more information.
    
    
23. Fuel sellers that own the fuel when there is theft, destruction, contamination or bad debts associated with fuel sales may claim a refund.  The process for claiming a refund of tax is described in Information Circular FT-6, “Tax Refunds”.  Where a direct remitter owns the fuel the claim for refund of tax is made using the “Generic Fuel Tax Return”.
    
    

REBRAND OF FUEL

24. Fuel sellers who own their own fuel and rebrand fuel to a lower or zero rate of tax must file the “Independent Fuel Sellers – Fuel Tax Adjustments” (form AT372 ) and applicable schedules with TRA to obtain a refund of the tax. Refer to Information Circular FT-6, “Tax Refunds,” for more information.
    
    
25. The full direct remitter reports on the Generic Fuel Tax Return any fuel it owned at the time of rebrand that was rebranded by a fuel seller.
    

RECORDS

26. A fuel seller is required to keep complete and accurate records of the volumes of each type and grade of fuel
    
    
    • purchased,
      
      
    • sold,
      
      
    • used for the fuel seller's own use,
      
      
    • in inventory at the end of each month, and
      
      
    • any other transactions in fuel shown separately.

27. A fuel seller is to keep complete and accurate daily records of the volumes of each type and grade of aviation or marked fuel transferred to another seller or delivered outside Alberta or fuel it marks.

28. A seller, including a vendor, of bunker fuel, kerosene, methanol or condensate must keep records of the volumes of sales of each type of fuel and the volume of each type of fuel purchased by each purchaser.
    
    
29. Records are to be retained for a period of six years from the end of the year in which the record was created.
    
    
30. Where a fuel seller receives a refund, rebate, allowance, grant or reimbursement under the Act or Regulations, the fuel seller must keep complete and accurate records of its purchases, possession and disposition of fuel and all documents relating to, and supporting, any claim for a refund, rebate, allowance, grant or reimbursement.
    
    
31. Sellers receiving a refund, rebate, allowance, grant or reimbursement shall keep their records
    
    
    • for a period of six years from the end of the calendar year in which the fuel was purchased; or
      
      
    • a period of four years from the end of the calendar year in which the refund, rebate, allowance, grant or reimbursement was paid;

whichever is later.

33. Records must be kept at the place of business or residence in Alberta unless the fuel seller has obtained written approval from TRA to keep the records at another location.
    
    
34. An application may be made to TRA for permission to destroy records before the end of the retention period. Also, TRA may, before the expiration of the period for retaining records, require a fuel seller to retain the records for a longer period. Where electronic records are created a fuel seller must ensure that a computer system enables the records to be read and printed is maintained.

INVOICING REQUIREMENTS

35. A fuel seller who sells clear taxable fuel to a consumer must prepare an invoice showing the name and address of the fuel seller, the date of the sale and the volume in litres of each type of fuel sold.
    
    
36. A fuel seller who sells tax-exempt fuel to a consumer must prepare an invoice showing the name and address of the seller, the name of the purchaser, the date of the sale, the volume in litres of each type of fuel sold, and the total selling price . The invoice must provide a statement that the selling price does not include fuel tax, and the amount of the AFFDA provided on a sale to a farmer for use in farming operations, if applicable.
    
    
37. A fuel seller who sells fuel to someone who is not a consumer must prepare an invoice or other documentation showing the name and address of the seller, the name of the purchaser, the date of the sale, the rate per litre of fuel tax included in the selling price or the amount of tax charged, or both, or that the fuel was sold exempt from tax, and the volume in litres of each type of fuel sold.
    
    
38. Whether a consumer, sole proprietor, partnership or corporation, the purchaser's name appearing on fuel invoices for tax-exempt sales must match the legal name used on the fuel tax exemption certificate (TEFU or AFFB number registration). This ensures fuel invoices clearly show the party who purchased the fuel and received the tax exemption and the AFFDA grant, if applicable. It is advisable to refer to the TEFS system to determine the exact name of the entity holding the fuel tax exemption certificate prior to making a marked fuel delivery or sale.
    
    
39. If a person has a sole proprietorship and an incorporated business, both entities should have separate exemption certificates to purchase fuel for their separate eligible commercial activities. To be eligible, each legal entity must have its own exemption certificate.
    
    
40. All fuel sellers must retain one copy of an invoice or documentation prepared and provide a copy to the purchaser of the fuel.