and Revenue Administration
Fuel Tax Act
Information Circular FT-4R1
||February 9, 2017
||Alberta Treasury Board and Finance,
Tax and Revenue Administration
|For more information:
FUEL TAX ACT INFORMATION CIRCULAR:
OF TAX-EXEMPT FUEL
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.
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.
SALE OF TAX-EXEMPT FUEL
This Information Circular explains:
ROLE OF EXEMPT-SALE VENDOR
- An exempt-sale vendor is a person registered with Alberta Treasury Board and Finance, Tax and Revenue Administration (TRA) to sell tax-exempt fuel to consumers. The term “tax-exempt fuel” was introduced effective March 27, 2015 to refer to fuel that is purchased either fully exempt or partially exempt, depending on the circumstances. The sale of tax-exempt clear or partially exempt marked fuel can be made only when the consumer provides the necessary proof of eligibility for the exemptions described below at the time the tax-exempt fuel is purchased. Tax-exempt fuel is marked where required by the Fuel Tax Act and Fuel Tax Regulation.
SALE OF CLEAR TAX-EXEMPT
- A consumer is exempt from paying tax on clear fuel if the consumer provides, at the time of purchase, a fuel tax exemption certificate or other prescribed evidence of exemption, and the fuel is intended for a prescribed purpose or use.
- Consumers who are eligible to purchase clear tax-exempt fuel and the proof that must be presented to the exempt-sale vendor by the consumer to verify eligibility are discussed below.
Indians or Indian Bands
- At the time of purchasing clear fuel exempt of tax for their personal use, the Indian or Indian band must present to the exempt-sale vendor an Alberta Indian Tax Exemption (AITE) card issued by TRA or a card issued by the Treaty 7 Tribal Council as proof of exemption. The Certificate of Indian Status card, issued by Indian and Northern Affairs Canada cannot be used. In all cases, the sale of clear fuel exempt of tax must be made by an exempt-sale vendor located on a reserve, the Garden River Settlement or the Heart Lake property described in the Regulations within the time period specified. Refer to the AITE series of Information Circular for additional information.
Armed Forces of Another Country
- Armed forces of another country stationed in Alberta may purchase clear fuel exempt of tax by providing documentation to the exempt-sale vendor confirming that they are armed forces of another country stationed in Alberta. The exempt-sale vendor is required to retain the documentation.
The Government of Canada
- To purchase clear fuel exempt of tax, the Government of Canada provides to the exempt-sale vendor an exemption certificate in the following form:
"This is to certify that the fuel ordered/purchased hereby
is being purchased by
Name of Department, Agency or Corporation
which is part of the Government of Canada or is a tax-free Government
of Canada agency, and is therefore not subject to Alberta fuel
- The certification must be recorded on the purchase order, contract, or invoice relating to the fuel purchased. Any fuel sold to a purported government entity without an exemption certificate is taxable.
Foreign Operator of Air Transportation
Operators of Mines in Alberta
- An operator of a mine in Alberta may purchase liquefied petroleum gas (LPG) for use in mining operations exempt of tax from a distributor of LPG by providing a copy of the letter issued by TRA acknowledging the mine operator’s exemption.
- Operators of railways may purchase clear diesel for use in operating a railway locomotive if the railway is registered with TRA and shown on TRA’s website as eligible to purchase tax-exempt locomotive fuel. See Information Circular RWY-1, Railways, for more information.
SALE OF MARKED FUEL
- A consumer is entitled to a partial exemption of $0.09 per litres on marked fuel if:
- the consumer provides, at the time of purchase, a fuel tax exemption certificate or other prescribed evidence of exemption, and
- the fuel is intended for a prescribed purpose or use.
- Registered sellers of marked fuel can sell marked fuel to other registered marked fuel sellers. A listing of these entities is posted on TRA’s website. However, sellers who use the marked fuel for their own use must have a valid Tax Exempt Fuel User (TEFU) or Alberta Farm Fuel Benefit (AFFB) number and remit tax on such fuel less the partial exemption.
- Persons, other than farmers, are eligible to purchase marked fuel upon presentation of a certificate issued by TRA establishing their eligibility. The marked fuel must be used for:
- commercial purposes in an engine, but not an engine that drives a motor vehicle, boat or aircraft or is used solely to regulate the temperature of a trailer used for the commercial transportation of goods;
- commercial use in a motor vehicle not required to be licensed or registered;
- use by a government authority other than the Government of Canada in an engine owned by the authority, where the engine does not drive a motor vehicle, boat or aircraft;
- use by a government authority other than the Government of Canada in a motor vehicle not required to be licensed or registered;
- production of heat or light other than in a motor vehicle, locomotive, or trailer used for commercial transportation of goods;
- for any purpose other than burning in an internal combustion or turbine engine.
- Consumers eligible to purchase marked fuel are required to present a TEFU number at the time of purchasing marked fuel. Refer to Information Circular FT-3, Fuel Tax Exemption Certificates, for more information.
SALE OF MARKED
FUEL TO FARMERS
- Upon presenting a certificate issued by Alberta Agriculture
and Rural Development, farmers are eligible to purchase marked fuel and receive
the Alberta Farm Fuel Distribution Allowance (AFFDA) on diesel
purchases. Marked fuel is to be used by farmers only in farming
operations in Alberta. Refer to Information Circular FT-3,
“Fuel Tax Exemption Certificates”, for more information.
DUTIES OF EXEMPT-SALE VENDORS
- Before the exempt-sale vendor makes the sale, the vendor should verify the eligibility for fuel tax exemption or partial exemption, record the approval number of the fuel tax exemption certificate (if applicable), and take reasonable steps to ensure the fuel is intended for eligible uses.
- Exempt-sale vendors are required to pass on the benefit of the tax exemption or partial exemption to eligible consumers. A vendor who does not pass on the benefit is liable to pay to TRA the amount equal to the benefit not passed on.
SALES TO INELIGIBLE CONSUMERS
- If an exempt-sale vendor sells tax-exempt fuel without obtaining proof of the consumers eligibility or knows the fuel will not be used for authorized purposes, both the exempt-sale vendor and the consumer are jointly and severally liable to pay TRA the amount of the tax the consumer would have been required to pay on the fuel.
- A consumer who purchases tax-exempt fuel must use the fuel for purposes noted in paragraph 5.
- A consumer who purchases tax-exempt fuel and uses the fuel, or permits the fuel to be used, for another purpose is liable to pay TRA the amount of tax the consumer would have paid had the fuel not been purchased exempt or partially exempt from tax. The tax is determined by TRA based on the amount of fuel used for ineligible purposes.