Tax and Revenue Administration Fuel Tax Act Information Circular TEFU-4R1

TEFU-4R1 / August 2010

ALBERTA FUEL TAX ACT INFORMATION CIRCULAR
TAX EXEMPT FUEL USER (TEFU) - MISCELLANEOUS 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. 

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.

This publication describes a variety of uses of tax paid fuel that may qualify for fuel tax rebates. The following topics are discussed in this circular:

• What is a Miscellaneous TEFU Rebate?
• Who Can Apply and What Documents are Required?
  • Bulk Exporter of Fuel
  • Tax Paid in Error – Foreign Embassies and Diplomats
  • Tax Paid in Error – Government of Canada
  • Non-motive Mixtures or Injection into a Well-bore
  • Commercial Tour Boat
  • Licensed Commercial Fishing
• Retention of Records
• Review of Applications by TRA
• Enquiries

WHAT IS A MISCELLANEOUS TEFU REBATE?

1. A miscellaneous TEFU rebate is a rebate of tax to consumers for certain tax-exempt activities, other than off-road commercial activities, as discussed in Information Circular TEFU-1, Tax Exempt Fuel User (TEFU) Rebates. Miscellaneous rebates include:
   
   
• bulk fuel exports by consumers;
• fuel tax paid in error by foreign embassies, diplomats, or Government of Canada;
• non-motive mixtures or injections into a well-bore;
• commercial tour boats;
• licensed commercial fishing;
• the use of fuel in a manner that makes the fuel unusable in an internal combustion or turbine engine; and
• aviation fuel tax for international flights.

Details of the rebates are set out below, except for the rebate on aviation fuel for international flights. Details on this rebate are found in Information Circular AV-1, Aviation Fuel Tax – International Flights.

WHO CAN APPLY AND WHAT DOCUMENTS ARE REQUIRED?

2. A consumer of Alberta tax-paid fuel that falls into any of the scenarios detailed below may apply for a rebate of fuel tax. Prior to submitting your first application, you are required to complete a ”Fuel Tax Rebate Enrolment Application” (AT4940).

Bulk Exporter of Fuel

3. If you are a consumer applying for a rebate of Alberta fuel tax paid on bulk fuel that you exported to another jurisdiction, please provide the following:
   
   
   1. “TEFU Rebate Application” (AT342);
   2. “Listing of Fuel Purchases - Schedule A” (AT343);
   3. “Fuel Purchase Reconciliation - Schedule A-1” (AT345)
   4. a covering letter explaining you are applying for a rebate for bulk export of fuel; and
   5. a copy of a bill of lading from a carrier with:

i. evidence that the fuel tax was paid in the other jurisdiction; or
ii. a copy of the customs document in the case of exports out of Canada;
iii. information about the quantity and type of fuel.

4. If you have any questions about the required documentation for this type of application, please contact TRA prior to submitting your application.
   

Tax Paid in Error - Foreign Embassies and Diplomats

5. A foreign embassy is exempt from paying tax on fuel purchased in, or brought into, Alberta for its own use. Foreign embassies include countries or states other than Canada; political subdivisions of that country or state; agencies of that country, state or political subdivision; or an accredited person representing that country, state or political subdivision in Canada.  Diplomats must be listed in the current edition of Diplomatic, Consular and other Representatives in Canada, published by the Government of Canada.
   
   
6. Please forward the following documentation with each application for tax paid in error:
   
   
   1. “TEFU Rebate Application” (AT342);
   2. “Listing of Fuel Purchases - Schedule A” (AT343);
   3. “Fuel Purchase Reconciliation - Schedule A-1” (AT345);
   4. if applicable, a copy of the page from the Diplomatic, Consular and other Representatives in Canada, showing the applicant's name; and
   5. a covering letter explaining that the application is for tax paid in error.

Tax Paid in Error - Government of Canada

7. Fuel paid for directly by the Government of Canada (not by a government employee) is exempt from Alberta fuel tax. The Government of Canada includes all government departments, and some agencies and Crown Corporations.
   
   
8. Forward the following documentation with each application for tax paid in error:

1. “TEFU Rebate Application” (AT342);
2. “Listing of Fuel Purchases - Schedule A” (AT343);
3. “Fuel Purchase Reconciliation - Schedule A-1” (AT345);
4. a covering letter explaining that the application is for tax paid in error; and
5. an exemption certificate in the following format:

Non-motive Mixtures or Injection into a Well-bore

9. If fuel is mixed with another substance making it unusable in an internal combustion or turbine engine, it may qualify for rebate of tax. The person who owns and mixes the fuel with the other substance may apply for a rebate. Examples include fuel used to:
   
   
   1. manufacture explosives; or
   2. manufacture fracturing fluid for injection into a well-bore.
      
      
10. Fuel is sometimes injected into a well-bore to stimulate additional production from a well, and may qualify for a rebate of tax. Only fuel purchased prior to January 1, 2006 will be eligible for the following application process.
    

Note : Fuel purchased after January 1, 2006 for manufacture of fracturing fluids, or injection directly into a well-bore, may only be claimed using the PROP applications process. See Information Circular PROP-1, Prescribed Rebate Off-road Percentages (PROP).

11. Forward the following documentation with each application for non-motive mixtures or injection into a well-bore:
    
    
    1. “TEFU Rebate Application” (AT342);
    2. “Listing of Fuel Purchases - Schedule A” (AT343);
    3. “Fuel Purchase Reconciliation - Schedule A-1” (AT345);
    4. a covering letter explaining that the rebate application is being made for a non-motive mixture and an explanation of the mixture.

12. Additional documentation that should be maintained for review and audit purposes includes, but is not limited to: inventory records, sales/disposal records, Unique Well Identifiers (UWI), product mix ratios, specific volume records on a per-well basis, etc.
    
    
13. If fuel owned by a consumer becomes contaminated, it may be eligible for rebate of tax.  Documentation supporting the purchases and contamination would be required.

Commercial Tour Boat

14. Rebate applications may be submitted for fuel used to operate commercial tour boats with the capacity to transport 20 or more passengers. Provide the following documentation with each application:
    
    
    1. “TEFU Rebate Application” (AT342);
    2. “Listing of Fuel Purchases - Schedule A” (AT343);
    3. “Fuel Purchase Reconciliation - Schedule A-1” (AT345);
    4. “Unlicensed Equipment Fuel Consumption Calculations – Schedule C” (AT337);
    5. “Unlicensed Equipment Listing – Schedule E” (AT339); and
    6. a covering letter explaining that the rebate application is being made for a commercial tour boat operation.
       
       
15. Additional documentation that should be maintained for review and audit purposes includes, but is not limited to: fuel tracking records, evidence of actual hours and consumption rates, and your commercial tour boat operator licence.

Licensed Commercial Fishing

16. Rebate applications may be submitted for fuel used to operate a commercial fishing boat. This includes commercial harvesting of fish in Alberta waters, but excludes guided fishing resorts or camps.
    
    
17. Provide the following documentation with the application:
    
    
    1. “TEFU Rebate Application” (AT342);
    2. “Listing of Fuel Purchases - Schedule A” (AT343);
    3. “Fuel Purchase Reconciliation - Schedule A-1” (AT345);
    4. “Unlicensed Equipment Fuel Consumption Calculations – Schedule C” (AT337);
    5. “Unlicensed Equipment Listing – Schedule E” (AT339); and
    6. a covering letter explaining that the rebate application is being made for a commercial fishing operation.
       
       
18. Additional documentation that should be maintained for review and audit purposes includes, but is not limited to: fuel tracking records, evidence of actual hours and consumption rates, evidence that the applicant is licensed to commercially harvest freshwater fish and that fuel was consumed for commercial fishing purposes, etc.

RETENTION OF RECORDS

19. Records and documentation related to your rebate application 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. These records must support all aspects of your application, according to the form signed when you enrolled under the TEFU rebate program. (See Information Circular FT-10, Offences and Penalties.)

REVIEW OF APPLICATIONS BY TRA

20. Prior to paying a fuel tax rebate, TRA will review the application and may contact you to request additional documentation or clarification, or may adjust the application accordingly. Your application may also be selected for audit by TRA’s Audit branch. In this case, you may be contacted to arrange for audit of all related records at your premises or to have your records delivered to TRA.
    

ENQUIRIES

21. For forms or additional information, please contact TRA. All forms and publications related to the Tax Exempt Fuel User program are also available on our website.