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Tax and Revenue Administration
Fuel Tax Act
Information Circular TEFU-1R
4


Last Reviewed: August 3, 2010
Produced by: Alberta Treasury Board and Finance, Tax and Revenue Administration
For more information: tra.revenue@gov.ab.ca

TEFU-1R4 / August 2010

ALBERTA FUEL TAX ACT INFORMATION CIRCULAR
TAX EXEMPT FUEL USER (TEFU) REBATES

NOTE: Effective 12:01 a.m., February 25, 2011, the Tax Exempt Fuel Use (TEFU) rebate for licensed vehicles, including Prescribed Rebate Off-road Percentages (PROP), is eliminated.  The marked fuel (tax excluded) component of TEFU, the Alberta Farm Fuel Benefit, and the Alberta Farm Fuel Distribution Allowance are not affected by this change.

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 provides an overview of the Tax Exempt Fuel User (TEFU) program for entities that are not eligible to claim under the Prescribed Rebate Off-road Percentages (PROP) program. For detailed filing directions refer to the “Tax Exempt Fuel User (TEFU) General Instruction Guide – Tax Exempt Fuel User (TEFU) Rebate Application” (IN342), designed to assist applicants to meet filing requirements and to reduce processing time for their claims. Topics discussed in this circular include:

OVERVIEW

  1. The Fuel Tax Act allows a consumer to obtain a fuel tax rebate for Alberta tax-paid fuel consumed for commercial purposes at off-road locations in Alberta in the following eligible vehicles or equipment:
    1. licensed motor vehicles,
    2. licensed refrigerated (reefer) units, or
    3. unlicensed equipment (subject to specific criteria detailed in this circular).

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DEFINITION OF "OFF-ROAD"?

  1. In this circular, “off-road” refers to any area where clear tax-paid fuel, used in eligible vehicles or equipment may result in the consumer qualifying for a rebate of the Alberta fuel tax. The following roads and areas qualify as off-road locations:

    1. any area that is not a highway as defined in the Traffic Safety Act (T-6 RSA 2000) (see below),
    2. a licence-of-occupation road,
    3. a private road on private or Crown land, or
    4. a highway under construction if the road is closed to travel by the public.

  2. A private road means any area that the public is not ordinarily entitled or permitted to use, in whole or in part, for the passage or parking of vehicles.  The term “private road” refers to the use, not the ownership, of the road.

  3. Section 1(p) of the Traffic Safety Act (T-6 RSA 2000) defines a highway as any thoroughfare, street, road, trail, avenue, parkway, driveway, viaduct, lane, alley, square, bridge, causeway, trestleway or other place, or any part of any of them, whether publicly or privately owned, that the public is ordinarily entitled or permitted to use for the passage or parking of vehicles and includes:
  1. a sidewalk, including a boulevard adjacent to the sidewalk;
  2. if a ditch lies adjacent to, and parallel with, the roadway, the ditch; and
  3. if a highway right-of-way is contained between fences or between a fence and one side of the roadway, all land between the fences, or all land between the fence and the edge of the roadway;

but does not include a place declared by regulation not to be a highway.

  1. Any area to which the public ordinarily has access for the passage or parking of vehicles is not considered to be an eligible off-road location. Examples of areas that are not considered to be off-road include:

    1. rest areas, truck stops, service station parking lots accessible to the public;
    2. commercial loading and unloading areas accessible to the public; or
    3. parking lots located adjacent to a business or commercial building accessible to the public.

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TAX EXEMPT FUEL USER PROGRAM

  1. The Tax Exempt Fuel User Program encompasses two separate components as detailed below:

    1. Marked fuel - A consumer with a TEFU certificate may obtain marked gasoline and diesel exempt of tax at the time of purchase. An entity may apply for a TEFU certificate by completing a “Declaration of Tax Exempt Fuel User Application ” (AT321) and submitting it to Tax and Revenue Administration (TRA) for approval. If approved, the entity is provided a TEFU certificate and is entitled to purchase tax-exempt (marked) fuel for use in unlicensed equipment owned by the entity, or for heating, as set out in the Alberta Fuel Tax Act. Any entity operating unlicensed equipment or vehicles must use marked tax-exempt fuel in those units to obtain a tax benefit unless, in TRA's opinion, marked fuel is not reasonably available.

    2. TEFU rebate applications – Consumers of clear fuel that have successfully enrolled with TRA can apply for a rebate of the Alberta tax paid on the litres consumed in an off-road capacity for commercial purposes in eligible vehicles or equipment.
  1. TEFU applicants are required to submit the “Fuel Tax Rebate Enrolment Application” (AT4940) to TRA, prior to filing their first TEFU rebate application for periods after March 31, 2007.  With the implementation of the PROP program, enrolment is particularly necessary to establish eligibility and ensure that applications filed under TEFU are not for PROP-eligible activities after the industry implementation date.  Please also refer to Information Circular PROP-1, Prescribed Rebate Off-road Percentages (PROP), for program details and requirements.

  2. To claim a TEFU rebate for unlicensed equipment, the applicant must have had a valid TEFU certificate at the time the fuel was purchased and satisfy TRA that marked tax-exempt fuel was not reasonably available as a result of either:

    1. no bulk fuel dealer with marked fuel available for sale located within a 50-kilometre radius of the off-road location; or

    2. the fuel was being consumed in an off-road operation where clear fuel must be used and there existed a legal restriction (e.g., zoning), prohibiting the consumer from having more than one storage tank.

  3. PROP – TRA has been actively working with industry to simplify the administration of the TEFU program. The Fuel Tax Regulationwas amended in 2004 allowing for the implementation of a simplified process for calculating, and applying for fuel tax rebates (Information Circular PROP-1, Prescribed Rebate Off-road Percentages). Applicants using clear gasoline, diesel or liquefied petroleum gas (LPG) off-road, in a prescribed industry sector, must use the PROP application process for all fuel purchased on or after the implementation date for that sector. Some applicants are entitled to apply for rebate under both TEFU and PROP for the same period, as discussed in the “Complex Entities” section of this information circular.

  4. If you carry on PROP eligible activities after the PROP industry implementation date AND you also carry on non-PROP (TEFU) eligible activities, you must obtain a determination from TRA whether you are eligible to file claims under one or both programs. 

  5. To obtain a determination of program eligibility, submit a completed Fuel Tax Rebate Enrolment Application (AT4940) to TRA to outline both your PROP and TEFU activities.  Please refer to Information Circular PROP-1, Prescribed Rebate Off-road Percentages (PROP), for program details.

  6. Please provide a clear description in field number 14 of the Fuel Tax Rebate Enrolment Application (AT4940) for all operational activities and their related industries.  If there is not sufficient space attachments are encouraged.  To compliment your description of activities you may attach copies of relevant materials.

  7. You will be contacted to discuss your particular fuel tracking methods for the different activities you perform.  TRA will then advise you if you should claim under one or both programs.

  8. The consumer must also reconcile the fuel when claims are made under both programs in a manner approved by TRA. (See “Dual TEFU/PROP Applicants” section below for details.)

  9. There are other rebates, not related to off-road use, available under the TEFU program.  See Information Circular TEFU-4, Miscellaneous Rebates, for more information.

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APPLICANT ELIGIBILITY

  1. Commercial entities – Subject to successful enrolment, any sole proprietor, partnership, trust, or corporation may apply for a rebate of Alberta fuel tax paid on fuel used in eligible vehicles or equipment for commercial purposes in off-road operations in Alberta. In the case of a corporation, certain circumstances could delay, or preclude, the payment of a fuel tax rebate:

    1. TRA can pay a rebate only to an active corporation. An example of an inactive entity is a corporation that has been struck or no longer exists as a legal entity due to dissolution.

    2. in the case of an amalgamation, TRA can only pay a fuel tax rebate to the successor corporation of the amalgamation with an active status on the date the rebate is issued, even if the application period predates the amalgamation date.

  2. Non-commercial entities – Subject to successful enrolment, a rebate of fuel tax may also be granted to the following non-commercial entities:

    1. city, town, village, summer village, municipal district, specialized municipality or town under the Parks Towns Act ;
    2. school board;
    3. public college or university as defined in the Post-secondary Learning Act ;
    4. Metis settlement; or
    5. regional health authority.

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APPLYING FOR THE FUEL TAX REBATE

  1. Filing in required format – Applicants are required to submit a “TEFU Rebate Application” (AT342), required schedules, forms, and supporting documentation to TRA within three years of the end of the calendar year in which the fuel was purchased. Incomplete submissions, and those not in the required format, will be disallowed and returned to the applicant for correction. Computer-generated forms may be used instead of TRA's pre-printed forms, provided all information is in the exact same format.

  2. First-time applicants – A first-time TEFU applicant must submit the following documents for review with the application:

    1. original invoices supporting all eligible fuel purchases;
    2. detailed records showing the time spent and the fuel consumed, or a survey of the time spent and fuel consumed prepared as required by TRA (see TEFU-2, Determining Schedule B (AT344) Data);
    3. supporting documentation for the consumption rates used in each activity in all eligible vehicles or equipment; and
    4. any additional documents, as required.

  3. Application periods and time limits – Effective April 1, 2007, TEFU applications are to be prepared on a calendar quarter basis. A rebate application must be received by TRA not later than three years after the end of the calendar year in which the fuel was purchased. Applications received by TRA after this period are statute-barred and ineligible for rebate.

  4. Amended applications – An amended application will receive a new receipt date and may be submitted unless the purchases it relates to are statute-barred for rebate purposes. An amended application will not be accepted unless the entire original application has been recalculated and resubmitted. An amended application must be submitted separately, not included with a TEFU application for subsequent periods. Amended applications cannot be a result of a new survey adjusting the allocation of on- and off-road hours used in prior assessed applications.

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COMPLEX ENTITIES

  1. Dual TEFU/PROP applicants – An applicant may be engaged in multiple off-road activities resulting in applicant eligibility for rebate under both TEFU and PROP. For example, Division A is engaged in a PROP-eligible activity, but Division B is not. A dual applicant must ensure that all fuel used for PROP activities is deducted from the totals on the “ Fuel Purchase Reconciliation” (AT345) for the TEFU applications process.

  2. Applicants with multiple divisions and/or location – Applicants with divisional operations, or operating in multiple locations, must file a consolidated TEFU application for all operations. Separate surveys or actual records are required to support the off-road activity for each division or location. All divisions and/or locations must be filed on one TEFU application for each application period. TRA will not accept separate applications for different divisions, or locations, for the same legal entity. Calculations for each division or location can be separate; but only one application form may be filed.

  3. Applicants with IFTA-registered vehicles –Applicants with vehicles that report under IFTA must disclose IFTA fuel when filing a TEFU rebate. An applicant must adjust its fuel purchase data to reflect actual fuel consumed in Alberta rather than total fuel purchased in Alberta for IFTA vehicles in the application. The IFTA adjustment (AB row, column 6 of the IFTA return) for the quarter must be entered on the “Fuel Purchase Reconciliation” (AT345). A rebate will not be processed until the corresponding calendar quarter IFTA return has been received by TRA. Applicants registered for IFTA in another jurisdiction must forward IFTA documentation for review. Similarly, TEFU applicants whose IFTA return is filed by a third party must obtain the IFTA information and submit it with the fuel tax rebate application.

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RETENTION OF RECORDS

  1. All records and documentation related to a fuel tax rebate must be retained for six years from the end of the calendar year in which the fuel was purchased, or four years from the end of the calendar year in which the rebate is paid, whichever is later. The applicant must maintain complete records supporting a rebate application, including records to support a survey, according to the declaration signed by the applicant on enrolment. (See Information Circular FT-10, Offences and Penalties.)

REVIEW OF APPLICATIONS BY TRA

  1. Prior to paying a fuel tax rebate, TRA reviews the application, may contact the applicant to request additional documentation or clarification, and adjust the application accordingly. Payment of a rebate application does not necessarily conclude the review. The application may undergo an audit by TRA's Audit Branch at which time the applicant would be contacted for further clarification, to arrange for audit of all pertinent records at the applicant's premises, or to have records delivered to TRA for audit.

ENQUIRIES

  1. For forms or additional information, please contact TRA. Forms and the “Guide for Applicants” are also available on our website.

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