Tax and Revenue Administration (TRA), Alberta Finance,
administers the Fuel
Tax Act*, which currently provides for the following:
- collection of fuel
taxes on gasoline, diesel, and aviation fuel;
- payment of aviation
fuel tax rebates;
- collection of fuel
taxes on propane (LPG) used as motive fuel or
dispensed from an automotive dispensing system;
- collection of fuel
taxes from railways;
- reallocation of
fuel taxes collected based on pro-ration under
the International Fuel Tax Agreement (IFTA), including
settling accounts with all member jurisdictions;
- payment of fuel
tax refunds to propane retailers for tax-exempt
sales;
- administration of
fuel tax exemption under the Tax Exempt Fuel User
(TEFU) program, including payment of rebates under
the program;
- provision of farm
fuel benefits, including payment of fuel tax refunds
and grants, under the Alberta Farm Fuel Benefit
(AFFB) program;
- administration of
fuel tax exemption under the Alberta Indian Tax
Exemption (AITE) program, including the payment
of refunds under the program.
*IMPORTANT NOTICE: A new
Fuel Tax Act was passed in the 2006
spring session of the Alberta Legislature. It will
be proclaimed when new Fuel Tax Regulations are
developed and approved. All information circulars
relating to the Fuel Tax Act and Regulations
will be revised entirely when the Regulations are
approved and the new Act is proclaimed in force.
Background
The Alberta Fuel Tax
Act is a direct tax on consumers for the purchase
of all unmarked fuel in Alberta. This includes
gasoline, diesel and propane, except where the fuel
is delivered and consumed outside Alberta. Natural
gas and ethanol are tax free, as well as fuel used
for eligible agricultural operations or commercial
off road purposes.
The current tax rates
are 9 cents/litre for gasoline and diesel and 6.5
cents/litre for propane. The rates for railway and
aviation fuel are 1.5 cents/litre (effective May
1, 2001) and 1.5 cents/litre respectively.
Tax
Exempt Fuel Use (TEFU)
Alberta provides tax
exemptions and rebates on fuel used off-road for
commercial purposes. TEFU currently provides
benefits of about $120 million per year, including
approximately $45 million in the form of rebates.
Prescribed Rebates Off-road
Percentages (PROP)
Alberta Finance, Tax and Revenue Administration
(TRA) and several industry sectors have signed agreements
to simplify administration of the Tax Exempt Fuel
Use (TEFU) program. These industry sectors include
those entities involved in oil and gas drilling,
production, and servicing, in oil and gas geophysical
or seismic exploration, and in forestry. The simplified process,
known as Prescribed Rebates Off-road Percentages
(PROP), uses prescribed rebate percentages based
on activity and type of vehicle/equipment, for rebate
calculations and claims.
Alberta
Farm Fuel Benefit Program and Farm Fuel Distribution
Allowance
These programs reduce
the cost of fuel used in farm vehicles by eligible
Alberta farmers, providing an exemption from the
fuel tax of 9 cents per litre on both diesel and
gasoline and 6.5 cents per litre on propane, and
a subsidy of 6 cents per litre on diesel. Alberta
farmers use about 550 million litres of diesel and
400 million litres of gasoline per year. The programs
provide benefits of about $120 million per year.
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