Tax and Revenue Administration Fuel Tax Act Information Circular FT-6

FT-6/ March 2007

ALBERTA FUEL TAX ACT INFORMATION CIRCULAR - TAX REFUNDS

(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 the provisions for fuel tax refunds to recipients. Topics include:

• Refund of Tax
  
• Refund of Tax to Recipients other than Consumers
  
  • Sale of Fuel Exempt from Tax to Eligible Consumers
    
  • Other Circumstances for Refund of Tax
    
  • Bad Debt
    
• Refund of Tax on Aviation Fuel Exported in Bulk and Used Outside Alberta by Consumers
  
• Process for Application of Refund
  

REFUND OF TAX

1. A recipient may apply to Alberta Finance and Enterprise, Tax and Revenue Administration (TRA), for a refund of all or part of the tax paid where the recipient paid the tax on fuel and one of the following situations arises on the tax-paid fuel.

REFUND OF TAX TO RECIPIENTS OTHER THAN CONSUMERS

Sale of Fuel Exempt from Tax to Eligible Consumers

2. Tax paid by a recipient other than a consumer may be refunded to the recipient if the recipient sells clear fuel exempt from tax to a consumer who, at the time of purchase, provides the recipient with a valid fuel tax exemption certificate or other evidence of exemption. Refunds for such tax exempt sales include the following:

Sale to Indians or Indian Bands

1. The recipient sells the fuel exempt from tax to a consumer who is an Indian or Indian Band and who, at the time of purchase, provides the recipient with an Alberta Indian Tax Exemption (AITE) card issued by TRA or a card issued by the Treaty 7 Tribal Council to purchase fuel on a reserve, the Garden River Settlement or the Heart Lake property described in the Fuel Tax Regulations and within the time period specified.
   
   
2. Indians and Indian bands in Alberta can purchase fuel exempt from the provincial tax, when such purchases are made at registered exempt-sale vendors located on Alberta Indian reserves or from registered recipients who deliver to reserves. For further information about the AITE program, refer to the AITE series of information circulars.

Sale to Armed Forces of Another Country

3. The recipient sells the fuel exempt from tax to a consumer who is the armed forces of another country stationed in Alberta and who, at the time of purchase, provides the recipient with satisfactory documentation confirming that they are the armed forces of another country stationed in Alberta.

Sale to the Government of Canada

4. The recipient sells the fuel tax exempt to a consumer who is the Government of Canada and who, at the time of purchase, provides the recipient with 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 tax."

Sale to Foreign Operator of Air Transportation Service

5. The recipient sells the fuel exempt from tax to a consumer who is a foreign operator of an air transport service and who, at the time of purchase, provides the recipient with satisfactory documentation that the operator qualifies as a foreign operator under the Aeronautics Act (Canada) and is eligible to purchase aviation fuel exempt of federal excise tax. Refer to information circular AV-1, “Aviation Fuel Tax- International Flights”, for more information.

Other Circumstances for Refund of Tax

3. Tax paid may also be refunded to recipients other than consumers under the following circumstances:

1. The recipient exported the fuel from Alberta in bulk and the fuel was used outside Alberta (refer to the information circulars FT-11, “Direct Remitters”, and FT-12, “Fuel Sellers” for more information).
   
   
2. The fuel was re-branded to
   • a fuel with a lower or no tax rate, or
   • a non-taxable product that is no longer a fuel.
     
     
3. A verifiable quantity of the fuel was stolen or destroyed. Examples include fuel destroyed in a natural disaster, accident or fire, or fuel lost due to tank rupture or theft.
   
   
4. The recipient paid tax or remitted tax, or both, in error.
   
   
5. The fuel could not be sold by the recipient due to contamination.
   
   
6. Liquefied petroleum gas (LPG) was sold to a consumer from a system other than one used to dispense LPG for use as a motive fuel and was used for a purpose other than as a motive fuel.

Bad Debt

4. A refund of tax may be available if the recipient sold the fuel on credit and a portion or all of the debt for the sale is a bad debt. Only the tax relating to the portion of the debt that is uncollectible may be refunded.
   
   
   1. For the debt to be classified a bad debt, the recipient must establish that the debt is uncollectible and that it was included in the recipient's income for the current or a preceding year under the Income Tax Act (Canada).
      
      
   2. A debt will not be considered uncollectible unless the recipient has made all efforts to collect the debt that would reasonably be expected to be made by a creditor who is dealing at arm's length with a debtor, or, in the case of a bankruptcy or receivership of a debtor, has filed a claim with the trustee or receiver that identifies the amount of fuel tax owing separately.
      
      
   3. A recipient will not be considered to have made all effort to collect the debt if the recipient continues to sell fuel to the person after the recipient has established that the debt owing by that person has become uncollectible.

REFUND OF TAX ON AVIATION FUEL EXPORTED IN BULK AND USED OUTSIDE ALBERTA BY CONSUMERS

5. Consumers who pay tax on aviation fuel, export the fuel in bulk, and use the fuel outside Alberta may apply for a refund of the tax the consumers paid in Alberta.
   

PROCESS FOR APPLICATION OF REFUND

6. To apply for a refund, other than a refund relating to tax-exempt sales of LPG (refer to PRO information circular series for information) and tax-exempt sales to Indians (see “ Sale to Indians or Indian Bands” ), complete “Fuel Tax Adjustments” (form AT372). Attach invoices and any other records and documents required by TRA to support the claim and calculate the amount of fuel tax to be refunded. You may need to complete additional forms and attach these to form AT372, depending on the reason for the refund application. These are as follows:
   
   
   • for exports, other tax-exempt fuel sales, bad debts, lost fuel (stolen, destroyed etc.), or contaminated fuel, complete the “Independent Fuel Sellers Tax Refund Application” and appropriate schedules.
     
   • for re-brands, complete ”Re-brand Notification” (form AT376).
     
     
7. Applications for refunds of tax, other than refunds related to bad debts and stolen or destroyed fuel, must be received by TRA not later than three years from the end of the year in which the circumstances causing the refund claim occurred.
   
   
8. For bad debts, the refund application must be received by TRA within 90 days of the date the applicant receives a notice of bankruptcy or appointment of a receiver, or within 90 days from the date the debt was written off by the applicant as a bad debt.
   
   
9. For stolen or destroyed fuel, the recipient must inform TRA of the loss immediately, unless the recipient sells fuel for a full direct remitter. For the latter, the recipient must inform the full direct remitter of the loss immediately. The application for a refund must be received by TRA within one year from the date the fuel was stolen or destroyed.
   
   
10. Refund claims arising from tax-exempt sales of clear fuel to Indians and Indian bands must be made every calendar week using the AITE Direct Point of Sale System. Claims may also be completed on paper. Refer to information circular AITE-3R5, “Exemptions under the AITE Program” , for more information on refunds under both systems.
    
    
11. Calculate refund claims arising from tax-exempt sales of LPG by completing “Propane Retailer Claim for Refund of Propane Tax” (form AT384) and the “Calculation of Non-Taxable Propane Volumes Daily Worksheet” (form AT385). Do not submit the refund applications until the total amount of the refund due exceeds $100.00. Refer to Information Circular PRO-2R1, “ Tax Refunds for Tax-Out Sales”, for more information.
    
    
12. On receipt of a refund application, TRA reviews the application and may ask for additional information to determine the applicant's eligibility. Before any refund may be made, TRA must be satisfied that the recipient has paid the tax. If TRA determines that the applicant is entitled to a refund, TRA pays the refund in the amount determined by TRA. If TRA refuses an application for a refund, credit or allowance, in whole or in part, TRA provides the applicant with a notice of disallowance specifying the disallowed amount and the reasons for disallowance.