Tax and Revenue Administration Fuel Tax Act Information Circular TEFU-2R1

TEFU-2R1 / July 2009

ALBERTA FUEL TAX ACT INFORMATION CIRCULAR
TAX EXEMPT FUEL USER (TEFU):  DETERMINING SCHEDULE B (AT344) DATA

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. 

Click here for Questions and Answers relating to the 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.

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This information circular explains the two methods that TEFU applicants may use to determine the off-road data for licensed vehicles or equipment required to complete “Schedule B” (form AT344) of a TEFU claim. Topics include:

• Overview
• Actual Records
• What is a Survey?
• Data Required for a Survey Using Either Method
• Survey Checklist
• Applying Survey Results
• Direct Time Survey
• Percentage of Fuel Allocation Survey
• Survey Adjustments for Out-of-Province Activity
• Expired Surveys and Extensions
• Retention of Records
• Enquiries

Overview

1. To accurately complete a TEFU rebate claim, you must show the data used on “Schedule B” (form AT344) was determined according to methods accepted by Alberta Finance, Tax and Revenue Administration (TRA). Currently, there are two accepted methods for determining “Schedule B” (form AT344) data:

   1. actual records, and
   2. completion of a survey of routine operations.

Actual Records

2. You may submit a summary of actual hours for the entire claim period, if the documentation is based on actual observed activity and records; for example, if you maintain a logbook recording the following for each vehicle included in the claim:

   1. vehicle activity (i.e., idle, travel, and PTO operation);
   2. on-road and off-road time (hours) spent conducting each activity;
   3. job locations; and
   4. fuel purchased for each vehicle.
      
      
3. Please submit actual records in summary form with your claim, and ensure you account for all vehicle time (i.e., on-road, off-road, and engine-off) for the period. Next, apply the known fuel consumption rates for each vehicle, determined using one of the methods discussed in Information Circular TEFU-3, “Determining Fuel Consumption Rates”.
   
   
4. Once you have completed “Schedule B” (form AT344), complete a fuel reconciliation to verify that you purchased enough fuel during the period to complete all the vehicle activities reflected in your summary of vehicle hours. If your fuel use is greater than your purchases for a particular vehicle, this indicates the consumption rate and/or the hours are not correct.

What is a Survey?

5. For the purpose of a TEFU claim, a survey is the recording of a representative sample of routine time, vehicle activity and fuel purchases for similar vehicle classes. These recorded observations may then be used to calculate off-road fuel use for a claim period. Surveys must be based on actual fuel used during the period surveyed, not on estimates. There are currently two acceptable survey methods – direct time and percentage of fuel allocation. Should you wish to propose another method, contact TRA for approval prior to completing the survey.
   
   
6. The sample size (i.e., number of vehicles) and survey period may affect the accuracy of a TEFU survey. Generally, the larger the sample size, the more likely the survey will be representative of routine operations. When a rebate claim is based on a survey, the survey period, sample size, and vehicle types surveyed should be representative of your operations and vehicle use for the entire period.
   
   
7. You can apply a survey to calculate a TEFU rebate when that survey represents your routine operations for the entire claim period. For the purpose of a TEFU claim, the phrase “routine operations” refers to commercial operations:
   
   
   1. conducted in the same geographical area;
   2. engaged in the same off-road activity; and
   3. using a consistent fleet of licensed vehicles.

8. The percentage of your total fuel purchases used off-road cannot vary by more than 20 per cent, for the vehicle class surveyed from quarter to quarter, for your operation to be considered routine. If you operate in multiple locations, or conduct various activities during a claim period, you should conduct a survey for each location and/or activity.

Data Required for a Survey Using Either Method

9. If there is more than one vehicle class, fuel must be tracked, on an ongoing basis, to the specific vehicle surveyed during the survey period and to the vehicle class during the claim period, regardless of survey method. This fuel tracking is required to confirm the accuracy of the survey and whether it is representative for the claim period.
   
   
10. In addition to information that identifies the surveyed vehicle(s), the following data should be recorded for each vehicle for the entire survey period:
    
    
    1. job location(s);
    2. beginning and ending odometer readings;
    3. all on-road and off-road hours spent travelling, idling, operating power take-off (PTO) and the hours that the engine is off (the daily total should not exceed 24 hours); and
    4. fuel purchases for each surveyed vehicle.
       
       
11. Be sure you know the fuel consumption rates for travel, PTO, and idle at the time the survey is conducted for the surveyed vehicle(s). You must also account for the total fuel consumption for each surveyed vehicle. To determine the actual fuel consumed during the survey, fill the fuel tank of each surveyed vehicle at the beginning and end of the survey period. The total fuel purchased for the vehicle during the survey period equals the total fuel consumption. Please retain all original documentation relating to your survey:
    
    
    1. records of hours spent conducting each activity during the survey;
    2. original fuel purchase documentation; and
    3. evidence that the consumption rate at each activity was known for the surveyed vehicle(s) (e.g., engine downloads, or fuel consumption test results).

Survey Checklist

12. The basic requirements for a survey, either direct time or per cent of fuel allocation, to be considered satisfactory and representative of routine operations include:
    
    
    1. the unit reference number, activity, off-road location and operator are noted;
    2. the survey reflects the minimum thirty-day duration for surveyed vehicle;
    3. the survey provides details for both on-road and off-road vehicle activity;
    4. all four activities are accounted for: Travel, Idle, PTO and Engine-off;
    5. the fuel tank was filled at the beginning of the survey period (e.g., 375 litres);
    6. the fuel tank was filled again at the end of the survey period (e.g., 75 litres);
    7. inactive days are reflected in the survey (100 per cent time = Engine-off);
    8. fuel consumption rates for each activity (travel, idle, PTO) are known for the surveyed vehicle(s);
    9. fuel placed into the surveyed vehicle is accounted for;
    10. the fuel reconciliation for the survey period results in a variance of less than 5 per cent of fuel purchase volume;
    11. personal and/or non-commercial vehicle use is recorded 100 per cent as “on road” activity, as no rebate is available for non-commercial use. Employees taking a vehicle home must account for any personal use of the vehicle;
    12. locations are specified and documented (i.e., provide the address, LSD, etc.); and
    13. all out-of-province fuel, time and activity should be accounted for (see “Survey Adjustments for Out-of-province Activity” section below).

Separate surveys should be done where there are significant seasonal variations.

Direct Time Survey

13. You can calculate your “Schedule B” (form AT344) hours by multiplying the hours spent conducting each activity (i.e., travel, idle, PTO) during the survey period, by the number of months in the claim that the vehicle was in operation. Before submitting a claim based on a Direct Time Survey, ensure that you:

    1. reconcile the total fuel consumed for the claim period for all activities (on- and off-road) with the fuel purchases during the claim period to ensure that your total fuel consumption calculated does not exceed 100 per cent of fuel purchases. If your fuel consumption exceeds your total purchases, a new survey must be completed before submitting further rebate claims. The number of months may need to be prorated to reflect vacation downtime or when the vehicle was not being used.
       
       
    2. calculate the off-road percentage by dividing the off-road fuel consumption by the total fuel purchases for each vehicle type/group surveyed. If the off-road percentage has varied by more than 20 per cent per vehicle class compared to your previous claim, a new survey will be required.

Example:

Based on this calculation, a new survey has to be conducted for this claim period as the prior survey is no longer representative, because there would not be enough fuel to cover on-road activity.

Click here for an example of a Direct Time Survey and Fuel Reconciliation (pdf, will open in a separate window).

3. Once you have completed your survey of operations, multiply the total hours for each off-road activity by three to determine the total Schedule B (AT344) hours for the quarter:

 

4. These off-road hours for each activity are then used to complete “Schedule B” (form AT344):

Percentage of Fuel Allocation Survey

14. You can also use the results of your survey to calculate a percentage of fuel used off-road. This claim is a Percentage of Fuel Allocation Survey, and requires the following supporting documentation:
    
    
    1. detailed records of actual fuel volumes tracked to each surveyed vehicle during the survey period. This allows the applicant and TRA to evaluate and verify the accuracy of the survey and the fuel consumption rates.
       
       
    2. evidence of the total fuel volumes purchased for each vehicle, or vehicle grouping, that the percentage of fuel is applied to. Such evidence might include fuel tracking reports, fleet card statements, etc., and should be readily available for inspection by TRA if requested.
       
       
    3. detailed calculations to support the claim of hours and percentages of fuel purchases from the survey results to the “Schedule B” (form AT344) for the period. These calculations should be completed for each specific vehicle, or vehicle grouping, to which the survey is applied.
       
       
       Click here for an example of a Percentage of Fuel Allocation Survey and Fuel Reconciliation (pdf, will open in a separate window).
       
       
    4. To apply this survey to determine “Schedule B” (form AT344) data, first apply the results of the survey to the total eligible fuel for the vehicle, or group of vehicles, that the survey represents. For example: assume the survey is representative of, and applied to, seven vehicles for the claim period. Further assume that fuel purchases of 155,678 litres were tracked to these vehicles during the claim period. Applying the percentage of fuel allocation survey, the total “Schedule B” (form AT344) fuel would be calculated as follows:

Cold Lake Picker Truck Group
Total Fuel Tracked to Group	155,678	155,678	155,678	155,678
Off-Road Activity	Travel	Idle	PTO	Total
Multiply by Survey % Allocation	44%	1%	4%	49%
Schedule B Fuel Consumed by Activity (litres)	68,498.32	1,556.78	6,227.12	76,282.22

5. When using this type of survey, you can only have one unknown variable when completing the “Schedule B” (form AT344) entries. This unknown variable will be the “Hours Operated per Unit”. The number of units is known (7), the consumption rate per hour for each activity type is known (as required to conduct a representative survey of operations), and the total fuel is known (during the survey period and the claim period). To determine the hours, apply the following formula:

   Hours per Activity = Total Fuel by Activity / # of Units / Fuel Consumption Rate

	Fuel Consumed (in litres)		Number of Units of this type		Consumption Rate (litres/hour)		Hours Operated per Unit
Off-road travel	68,498.32	/	7	/	38.5	=	254.17
Idle	1,556.78	/	7	/	2.42	=	91.90
PTO	6,227.12	/	7	/	6.87	=	129.49

Then arrange this data into the standard Schedule B (AT344) format:

	Hours Operated per Unit		Consumption Rate (litres/hour)		Number of Units of this type		Fuel Consumed (in litres)
Off-road travel	254.17	x	38.5	x	7	=	68,498.32
Idle	91.90	x	2.42	x	7	=	1,556.78
PTO	129.49	x	6.87	x	7	=	6,227.12
Total litres of fuel consumed by Unit Activity and Location							76,282.22

Survey Adjustments for Out-of-Province Activity

15. Surveys should be representative of commercial activities and fuel consumption in Alberta. If during the survey period, activities are conducted outside of Alberta using the surveyed vehicle(s), this activity must be clearly identified. Out-of-province time per activity and fuel purchases should be included in the survey. Identify and include all out-of-province fuel purchases in the “Litres to Unit” column of the survey form. Identify and include all out-of province time, by activity, in the “On-Road Activity (Hours)” columns of the survey form.

Expired Surveys and Extensions

16. Surveys may be representative for up to four (4) years from the beginning date of the claim period to which the survey was first applied if the survey is still representative of routine operations. If a survey is provided and extends beyond this acceptable period, the claim will be disallowed during assessment.
    
    
17. Some TEFU applicants may have surveys that are still representative, but have expired. If an applicant is about to begin claiming under the Prescribed Rate Off-road Percentages (PROP) program, TRA may consider a survey extension on a case-by-case basis. Submit a request in writing and explain how the following criteria have been met:
    
    
    1. you have registered under PROP and are approved for the same activities;
       
       
    2. your survey expired less than one year prior to the PROP effective date; and
       
       
    3. your survey continues to be representative of:
       
       • geographical location of operations,
       • fuel usage patterns,
       • vehicle mix and usage,
       • hours of operations, and
       • current equipment consumption rates.

Retention of Records

18. All records and documentation related to your TEFU survey 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 was paid, whichever is later. (See Information Circular FT-10, “Offences and Penalties”.)

Enquiries

19. Please refer to our website for all forms and publications related to the Tax Exempt Fuel User program. For forms not available online or for additional information, please contact TRA.