Tax and Revenue Administration Fuel Tax Act Information Circular BD-3

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
SALES OF MARKED FUEL

This Information Circular sets out the requirements for the sale of marked fuel. The topics discussed include:

• Pricing of Marked Fuel
• Requirement for Exemption/Registration Numbers
• Provisions for Sales without Exemption/Registration Numbers
• Prohibitions Against the Sale of Marked Fuel by Non-Dealers

Pricing of Marked Fuel

1. Marked fuel is fuel that has been dyed (see Information Circular BD-4 for details on the dyeing of fuel) and is exempt from fuel tax. Bulk dealers may sell marked fuel to customers with an approved Fuel Tax Exemption ("TEFU") or Alberta Farm Fuel Benefit registration number (see paragraphs 5 to 9).
   
   
2. In addition to the tax exemption, farmers may qualify for the Alberta Farm Fuel Distribution Allowance ("AFFDA"; see Information Circular BD-2 for details). Eligible farmers may purchase marked fuel at a reduced price net of the AFFDA allowed. This combined benefit of purchasing tax-exempt (marked) fuel net of AFFDA is called the Alberta Farm Fuel Benefit ("AFFB").
   
   
3. Bulk dealers must pass on the full amount of the tax exemption and AFFDA benefit to their customers. The price charged to a customer before deducting the fuel tax and AFFDA benefit (if applicable) must be no greater than what the customer would have been charged if that customer had purchased clear fuel.
   
   
4. If sales are made at a greater price than that specified above, the oil marketing company or independent bulk dealer is liable for the price difference plus any interest and penalties that may be assessed.

Requirement for Exemption/Registration Numbers

5. To be able to purchase marked fuel, a purchaser who is not a farmer must obtain a fuel tax exemption number by completing and submitting a "Declaration of Tax Exempt Fuel User" form (AT0321) to Tax and Revenue Administration ("TRA"). TRA will review the application and strive to process it within 30 days of receipt. A fuel tax exemption number will be issued once TRA is satisfied of the applicant's eligibility.
   
   
6. Farmers should obtain an AFFB registration number by completing and submitting the form, "Application - Alberta Farm Fuel Benefit" (form AG0259) to Alberta Agriculture, Food and Rural Development at the address stated on that form. They will review the application and issue an AFFB registration number once they are satisfied the applicant is eligible for AFFB benefits.
   
   
7. If a customer is operating as an individual at one location and as a corporation or partnership at another, separate exemption/registration numbers are required in the individual's name and in the corporation or partnership's name.
   
   
8. When customers provide bulk dealers with either a fuel tax exemption number or an AFFB registration number, the bulk dealers should ensure they have not been advised by TRA or Alberta Agriculture, Food and Rural Development that the customer is not eligible for TEFU or AFFB. If they have not been so advised, the bulk dealer should:
   
   
   • record the number(s) in their files;
   • when selling marked fuel to the customer, ensure that the sale is made to, and the invoice is in the name of, the entity that has been issued the number.
     
     
9. Marked fuel may not be sold to a consumer if the agent-dealer knows, or ought to know, that the fuel will not be used in an eligible operation. Otherwise, both the bulk dealer and the consumer may be liable for the tax on the fuel and the amount of AFFDA, as applicable, plus any interest and penalties that may be assessed.

Provisions for Sales without Exemption/Registration Numbers

10. Bulk dealers may be asked to sell tax-exempt marked fuel to customers who are eligible for AFFB or TEFU but have not obtained an exemption or registration number. Such customers must complete an application for either AFFB or TEFU, as applicable, at the time of purchase, or provide the agent-dealer with a copy of an application form they completed and mailed within the previous 30 days.
    
    
11. The dealer will review the application form(s) for eligibility of the "new" customer to purchase marked fuel. If the dealer has any questions concerning a new TEFU customer's eligibility, the dealer should call TRA at the toll free number as shown on the first page of this circular. In the case of AFFB, the dealer may refer to the brochure, Understanding Your Alberta Farm Fuel Benefit, from Alberta Agriculture, Food and Rural Development, and may direct questions to the toll free number shown in the brochure.
    
    
12. All TEFU applications completed at a bulk dealer's location must be submitted to TRA for processing. All AFFB applications completed at a bulk dealer's location must be submitted to Alberta Agriculture, Food and Rural Development.
    
    
13. If a fuel tax exemption number or AFFB registration number has not been received and a customer wishes to purchase marked fuel more than 30 days after the initial application, the bulk dealer should call TRA or Alberta Agriculture, Food and Rural Development for information on the status of the application. If the customer's application has been rejected, no further sales of marked fuel are permitted.
    
    
14. Customers whose AFFB registration or fuel tax exemption numbers have expired must re-apply with TRA or Alberta Agriculture, Food and Rural Development, as applicable, to obtain new fuel tax exemption or AFFB registration numbers.

Prohibitions Against the Sale of Marked Fuel by Non-Dealers

15. The Fuel Tax Act prohibits the sale of marked fuel by anyone who is not a refiner or agent-dealer, with one exception. A consumer who buys marked fuel may sell it to someone else who is the same "class" of consumer. For example, a farmer may sell marked fuel to another farmer. This exception is made to allow one consumer to sell to another when other sources of supply are not available. Such transactions are allowed only where the sale price of the marked fuel is the same as the purchase price.
    
    
16. Any consumer who re-sells marked fuel is considered to be a bulk dealer for the purposes of the Fuel Tax Act, and is subject to all its provisions. The re-seller must ensure that the consumer has the proper exemption or registration number and must keep proper invoices and other records.
    
    
17. Failure to follow the above requirements may result in the purchaser and seller being liable for uncollected fuel tax and any AFFDA allowed on the original sale of the fuel by the bulk dealer, plus any interest and penalties that may be assessed. All transactions involving the sale or disposal of fuel are subject to audit.