|
Tax
and Revenue Administration
OLD Fuel Tax
Act
Information Circular BD-2R1 |
| Released: |
August 1998 |
| Produced by: |
Alberta Finance, Tax
and Revenue Administration |
| For more information: |
tra.revenue@gov.ab.ca |
BD-2R1 /
August 1998
Note: Due to the
Government of Alberta reorganization in November 2004, where applicable,
the web versions of our documents have been updated to change references
from "Minister of Revenue" or "Provincial Treasurer"
to "Minister of Finance". References to "Revenue Canada"
or "Canada Customs and Revenue Agency" have been changed to
"Canada Revenue Agency" to reflect that name change as well.
The paper version of this document is available from Tax
and Revenue Administration and if applicable, will be updated as time
permits.
ALBERTA FUEL TAX ACT
INFORMATION CIRCULAR - BULK DEALERS
ELIGIBILITY FOR PURCHASE AND USE OF TAX EXEMPT FUEL
This information circular sets out who is eligible to purchase and use tax exempt fuel.
The topics discussed include:
- The AFFB is an exemption from fuel tax, plus a grant called the Alberta Farm Fuel
Distribution Allowance ("AFFDA"), provided on marked fuel used in eligible
farming operations in Alberta. The benefit is generally given to the farmer at time of
purchase by a reduction to the fuel price paid per litre. Information Circular BD-8 sets out the current AFFDA rates. Marked fuel which has been sold
net of AFFDA is referred to in this circular as farm fuel.
- In order to qualify for AFFB a person must be a farmer. A farmer is defined as a person
who is actively and directly carrying on farming operations (see paragraphs 3 to 5 for
details on farming operations) and who meets the minimum farm revenue test. Gross farm
revenue must be at least $10,000 unless the farmer's only other major sources of income
are benefits under the Canada Pension Plan and/or Old Age Security Programs, in which case
it must be at least $5,000. Farm revenue is defined as the value of farm products
produced, regardless of whether the farm products are sold, held in inventory, or used by
the farm family, plus revenue from eligible custom farming operations. Farm revenue does
not
include rental income where farm land, machinery, cattle or other assets are leased out on
either a cash or crop share basis. In order to provide for revenue fluctuations and to
allow for beginning farmers, the average expected revenue over the next three years from
existing farming operations may be used. In order to obtain AFFB a farmer must be issued a
registration number by Alberta Agriculture, Food and Rural Development. The AFFB
registration number entitles the farmer to purchase marked fuel at the reduced price. A
farmer may receive a registration number by completing an "Application - Alberta Farm
Fuel Benefit" form (form AG0259), which is available from bulk dealers or by calling
the AFFB information line at Alberta Agriculture, Food and Rural Development:
- Farm fuel may only be used in farming operations in Alberta (see paragraph 4). Farming
operations generally include any step in the production of plants or farm animals (see
paragraph 5 for exclusions). The operations of irrigation districts are also deemed to be
farming operations. Custom farming qualifies as farming operations provided it is done by
a farmer on behalf of another farmer. This includes harvesting crops and transporting
those crops from the machinery used to harvest the crops to the place where the crops are
to be stored. Heating buildings on a farm qualifies as a farming operation, as does the
personal use of a farm truck owned by a farmer and used by the farmer or his dependants
(see paragraph 7 for the definition of a farm truck).
- "Farming operations in Alberta" may include farming operations on land located
outside of Alberta where:
- the farmer carrying out the farming operations is
a) an individual who is resident in Alberta,
b) a partnership of which at least 50% is held by partners who are residents of Alberta,
or
c) a corporation of which at least 50% of the voting shares are owned by residents of
Alberta; or
- the farmer has a combined operation which is partly in and partly out of Alberta.
- Activities not included in farming operations are:
- any other business operated by a farmer;
- any activity conducted by someone who is not a farmer;
- transporting any agricultural products by a person other than the farmer who produced
them if the transportation is for hire or gain, including barter;
- transporting any non-farm product;
- clearing or breaking Crown land by a contractor who has been engaged by the Crown;
- work done by contractors on behalf of irrigation districts;
- adding value to farm products by mixing, grinding, or otherwise processing them, or
packaging them, except when carried out by the farmer who produced the farm products;
- breeding or raising animals commonly kept as pets or as displays in a zoo;
- renting out farm land, buildings, livestock, vehicles, machinery or any other asset,
whether on a cash or crop share basis, and any activities related to the maintenance or
improvement of the asset;
- providing services to farmers that are not in themselves a step in production, such as
veterinary services.
Examples of non-qualifying activities are seed cleaning, feed processing, hoof
trimming, artificial insemination, auctioneering, cattle weighing, custom fencing,
selling/repairing farm equipment, fur trapping, landscaping, alfalfa processing, research
based farming, using animals for rodeo activities, and commercial sawmill operations.
Businesses that deal with farmers, but which are not actively farming themselves, are not
eligible to purchase farm fuel, e.g. farm machinery dealerships, farm machinery repair
shops, trucking, bale hauling, mobile feed mills or grain cleaners.
This is not a complete listing of non-qualifying activities.
- Any machinery and equipment used by a farmer or his employees in a farming operation is
deemed to be farm machinery and equipment. Examples of farm machinery are tractors,
combines, stationary engines, augers, chain saws, cement mixers, pumps, off-highway
vehicles, manure spreaders, fertilizer applicators, grain dryers, grain vacuums,
airplanes, boats and hydroplanes. Farm fuel may not be used in cases where the equipment
is being used for a purpose other than farming operations. Marked fuel is not available
for use in airplanes (see paragraph 10).
- A farm truck is a truck, used exclusively in farming operations, which is owned or
leased by a farmer and licensed as a Class 2 vehicle with a "FARM" sticker on
the licence plate. Farm trucks include, but are not limited to, the following:
- trucks with standard cab and box configuration;
- full-size cargo vans;
- utility vehicles (e.g. Suburbans);
- sport utility vehicles (e.g. Ford Explorer, Jeep Cherokee).
Cars, stationwagons, minivans and motorhomes cannot be registered as farm
trucks. Vehicles used by farmers in a business other than farming also cannot be
registered as farm trucks.
- Farmers who operate a non-farming business in addition to their farming operations
must
use clear tax-paid fuel in the vehicles used for that non-farming business. If the
business involves the use of unlicensed equipment or use of vehicles off-road, an
application may be filed for a rebate of the fuel tax paid (see paragraph 18 for details).
Alternatively, the farmer may elect to use marked fuel in the equipment used in his
off-road, non-farming venture as well as his farming venture (see paragraphs 13 to 16
below). In that case he cannot obtain the AFFDA benefit on the farm fuel at time of
purchase and must follow the instructions set out in paragraph 9.
- If a farmer has an AFFB number but marked fuel is not available (that is, no bulk fuel
dealer within a 50 kilometre radius has marked fuel for sale), or if a farmer does not
have an AFFB number but uses non-farm fuel in the circumstances set out in paragraph 8,
the farmer may purchase clear tax-paid fuel and apply for a rebate of the AFFDA grant and,
where applicable, the tax paid. A "Farmer Benefit Application" (form AT4755)
must be completed by the farmer and received by Tax and Revenue Administration
("TRA") not later than three years from the end of the year in which the fuel
was purchased. Applications must cover at least a three-month period and must be
accompanied by all related fuel purchase invoices.
- A rebate is available to farmers who have purchased clear fuel for use in an aircraft
which is used for eligible farming operations. Also, aerial seeding and aerial application
of herbicides, pesticides and fertilizers on farm land for eligible farmers qualify as
custom farming operations. All aerial sprayers must purchase clear tax-paid fuel for use
in their airplanes. A "Farmer Benefit Application - Aerial Spraying" (form
AT4826) must be filed by the aerial sprayer and received by TRA not later than three years
after the end of the year in which the fuel was purchased. The application must cover a
period of at least three months and must be accompanied by fuel invoices and, where
applicable, the aerial sprayer's customer invoices.
- The Fuel Tax Act permits the sale of marked fuel to purchasers that qualify for TEFU and
that provide a valid fuel tax exemption number at time of purchase. Operations eligible
for TEFU are:
- commercial operations and operations of municipalities and educational institutions,
where the fuel is for use in an engine (other than an engine that drives, heats or cools a
motor vehicle, boat or aircraft, or ancillary equipment or trailers) or for use in a motor
vehicle that is not required to be licensed or registered;
- use of the fuel for any purpose other than burning it in an internal combustion engine,
including use as heating oil.
- A fuel tax exemption number is issued by TRA to applicants that are involved in eligible
operations. Information Circular BD-3 provides further details on
applying for a fuel tax exemption number.
- TEFU fuel may be used for the purposes set out in paragraphs 8 and 11 above.
TEFU
fuel cannot be used for any other purpose.
- Examples of some eligible uses of TEFU fuel are:
- fuel used in boilers for oil well servicing of rigs;
- construction - all unlicensed vehicles and equipment;
- logging - all unlicensed vehicles and equipment;
- diesel fuel used down-hole in an oil well.
- TEFU fuel is not permitted to be used in any vehicles operated on-road, regardless of
whether or not the fuel is used to power the vehicles. For example, refrigerated
tractor-trailers (reefer units), which use fuel both for the operation of the tractor and
operation of the refrigeration unit, in the trailer are not permitted to use TEFU fuel in
the fuel tanks of either the truck or the reefer unit. The sole instance where TEFU fuel
may be used on-road is where it is used instead of farm fuel in the circumstances
described in paragraph 8.
- TEFU fuel may be purchased for use as heating oil but the purchaser may not use that
fuel for any purpose other than the heating or lighting of buildings. Purchasers of clear
heating oil used in this type of operation may apply for a rebate of the fuel tax paid if
TEFU fuel was not reasonably available (see paragraph 19 below), by filing a "Fuel
Tax Rebate Application" form (form AT0342), together with the appropriate schedules
and invoices, with TRA.
- Marked fuel may be sold for use in vehicles and equipment which do not require a licence
and which are used exclusively off-road by commercial off-road operations, municipalities,
or educational institutions. Examples of commercial off-road operations are forestry,
mining, seismic, oil and gas well servicing, oil and gas well drilling, road building and
pipeline construction. In all other cases clear gasoline and diesel fuel must be sold for
use in internal combustion engines.
- Commercial vehicles used off-road will usually be licensed for on-road use. With the
sole exception of farm trucks, these vehicles must use clear, tax-paid fuel, both on-road
and off-road. In these cases a rebate may be claimed for the tax on the portion of the
clear fuel that was used off-road. A rebate is also available where clear fuel is
purchased for use in unlicensed vehicles and equipment because marked fuel is not
reasonably available to the purchaser (see paragraph 19 below). To receive a rebate of the
fuel tax, an applicant must complete and sign a "Fuel Tax Rebate Application"
(form AT0342) and send it to TRA. Information Circular TEFU-1
provides details on filing TEFU rebate applications and more complete details on
eligibility, including the definition of on-road and off-road.
- A rebate may be claimed by a consumer on the basis that marked fuel was not reasonably
available only if the consumer had a valid TEFU number at time of purchase, and:
- no bulk fuel dealer within a 50 kilometre radius of the consumer had marked fuel
available for sale; or
- the fuel was used in a project where clear fuel must also be used, and there is a legal
restriction (such as zoning laws) that prevent the consumer from using more than one
storage tank.
A rebate claim submitted under this section must include evidence that marked fuel was
not reasonably available to the consumer.
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