Tax Alert – Carbon Levy Inventory Declaration

With the Alberta government’s introduction of the Carbon Levy on January 1, 2017, there is a requirement to complete a Declaration of Fuel Inventory Form for anyone that is the owner of fuel, on January 1, 2017, at 12:01 a.m., which fuel is held for sale or resale in Alberta, and which fuel the owner would have been required to pay a carbon levy on at the time the fuel was purchased had the new legislation with respect to the carbon levy been in effect when the fuel was purchased.

This means a person (which includes a sole proprietor, a corporation, a partnership, a trust, and an Indian Band) that on January 1, 2017, at 12:01 a.m.:

  • is in possession of fuel for sale or resale in Alberta; and
  • would have been required to pay the carbon levy on the fuel at the time the fuel was purchased or imported had the Climate Leadership Act (“the Act”) and the Climate Leadership Regulation (“the Regulation”) been in effect when the fuel was purchased or imported into Alberta.

must file a Declaration of Fuel Inventory Form and remit the carbon levy payable to Alberta Treasury Board and Finance, Tax and Revenue Administration (“TRA”).  Both the form and the payment are due to be received by TRA by January 31, 2017.

Note, the Declaration of Fuel Inventory Form is not yet available.  TRA says it will be available on its website at 7:00 a.m. on January 1, 2017.

Pre-packaged fuels in factory sealed containers of 10 litres or less are exempt from the carbon levy.

A carbon levy inventory declaration is not required for a particular fuel if a person is entitled to purchase the particular fuel exempt from the carbon levy on January 1, 2017, or if the carbon levy would not have been required to have been paid on the particular fuel had the Act and Regulation been in effect when the particular fuel was purchased or imported into Alberta.

Exemptions

Three automatic exceptions to the application for an exemption are:

  1. For farmers – To be eligible to purchase marked gasoline or marked diesel exempt from the carbon levy a farmer must have an Alberta Farm Fuel Benefit (“AFFB”) number. Where a farmer has an AFFB number on or before January 1, 2017, the farmer’s AFFB number is deemed to be a carbon levy exemption certificate (it is only marked fuel that is eligible for the exemption);
  2. Foreign air transport service operators are not required to apply for an exemption certificate. An upfront exemption is available to foreign commercial carriers on international flights originating in Alberta. The exemption will be provided by the fuel supplier at time of billing, based on the federal documentation establishing eligibility to purchase aviation fuel exempt of excise tax for international flights; or
  3. For persons or bands meeting the definition of Indian or Indian band pursuant to the Indian Act and who have an active Alberta Indian Tax Exemption (“AITE”) card (for purposes of purchasing transportation fuels or other fuels) or who have a federal identification card or original certificate on record with the vendor (for purposes of purchasing natural gas or other fuels). The automatic exemption does not include aviation fuel.  For more information on the AITE Program, click on the link below.

http://finance.alberta.ca/publications/tax_rebates/aite/aite2.html

For those not meeting an automatic exemption, there are still exemptions available if:

  1. On January 1, 2017, you are entitled to purchase the particular fuel exempt from the carbon levy (in order to not include this fuel on the Declaration of Fuel Inventory Form, the exemption certificate must be in place on January 1, 2017); or
  2. A carbon levy would not have been required to have been paid on the particular fuel had the Act and Regulation been in effect when the fuel was purchased or imported into Alberta.

The application for an exemption certificate is AT5102 Carbon Levy Fuel User Exemption Application Form. Click on the links below for the form and the instruction guide for completing the form.  Additional forms may be required depending on your operations. The processing time for an exemption certificate is unknown.

http://www.finance.alberta.ca/publications/tax_rebates/carbon-levy/forms/AT5102.pdf

http://finance.alberta.ca/publications/tax_rebates/carbon-levy/forms/CL-Exemption-Guide.pdf

For more information on exemptions and licenses by fuel type, see the links below.

  1. Transportation Fuels

http://finance.alberta.ca/publications/tax_rebates/carbon-levy/CL-T-3.html

  1. Natural Gas (Heating Purposes)

http://finance.alberta.ca/publications/tax_rebates/carbon-levy/CL-NG-3.html

  1. Aviation Fuels

http://finance.alberta.ca/publications/tax_rebates/carbon-levy/CL-AV-3.html

  1. Other Fuels

http://finance.alberta.ca/publications/tax_rebates/carbon-levy/CL-OF-3.html

Conclusion

  • You will be required to complete the Declaration of Fuel Inventory Form if you are the owner of fuel on January 1, 2017, at 12:01 a.m., you are in possession of the fuel for sale or resale in Alberta and either, you do not have an exemption certificate in place on January 1, 2017, or you do not meet one of the automatic exceptions for the application of an exemption certificate.
  • Even if you do hold an exemption certificate, any fuel that is not covered under the certificate will still need to be reported on the Declaration of Fuel Inventory Form.
  • The Declaration of Fuel Inventory Form needs to be received by TRA by January 31, 2017.
  • Payments of the carbon levy with respect to the Declaration of Fuel Inventory Form need to be received by the Government of Alberta by January 31, 2017.
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