Tax and Revenue Administration Alberta Corporate Tax Act Guide for Alberta Royalty Credit Applicants

ALBERTA CORPORATE TAX ACT GUIDE:
Guide for Applicants - Alberta Royalty Credit
(For Individuals, Trusts and Estates)

This Guide contains information about the Alberta royalty credit and the forms that individuals, trusts and estates will file when claiming the credit. It is intended to assist you to complete the application. Every effort has been made to ensure the contents are accurate. However, if a discrepancy should occur in interpretation between this Guide and the Alberta Corporate Tax Act, the legislation takes precedence.

For forms or additional information, please contact Alberta Finance, Tax and Revenue Administration.

If you would like to print this Guide, click here for a pdf version.

In this Guide there are referrals to Information Circulars for more detail. These information circulars are published on this website. They are also available from Tax and Revenue Administration (TRA). Although these circulars were written with the corporate taxpayer in mind, the basic information also applies to individuals claiming the royalty credit.

In this Guide, unless otherwise indicated, a reference to an "individual" is a reference to an individual, a trust or an estate.

TABLE OF CONTENTS

INTRODUCTION

• Applying for the Alberta Royalty Credit
• Administration of the Alberta Royalty Credit
• Records and Books
• Audit of Claims

COMPLETION OF THE APPLICATION FORM

• Lines 1, 2, and 3: Name, Address and Alternative Address
• Lines 6 and 7: Taxation Year
• Line 8: Business Identification Number (BIN)
• Line 9: Social Insurance Number
• Line 10: Date of Birth
• Line 11: Name Change
• Line 11A: Previous Name
• Line 12: Alberta Crown Royalty
• Line 14: Crown Royalty Shelter
• Line 16: Alberta Royalty Credit
• Certification

Individuals, trusts and estates (collectively referred to as "individuals") can claim the Alberta royalty credit by completing an Alberta Royalty Credit and Alberta Tax Refunds Application for Individuals (form AT60). Submit this form together with supporting documentation after the end of the taxation year to:

ALBERTA FINANCE
TAX AND REVENUE ADMINISTRATION
9811 109 ST
EDMONTON AB T5K 2L5

Claiming the credit is a separate process from filing an individual's tax return. The credit is not applied against federal or provincial tax liability, but paid outright by a cheque issued by Alberta Finance.

The Alberta royalty credit applies to an individual who has had Alberta crown royalty in a taxation year. An individual's Alberta crown royalty consists of certain royalties receivable by, or payable to, the Government of Alberta under a lease or licence granting petroleum, natural gas, or petroleum and natural gas rights. See Line 12 of the "Completion of the Application Form" section of this Guide.

The Alberta royalty credit for a taxation year is calculated by multiplying the individual's Alberta crown royalty, to a maximum of the crown royalty shelter (see Line 14 of this Guide), by a weighted average of the prescribed quarterly rates in effect over the year. The rate is a function of the Royalty Tax Credit reference price that is set by the Minister of Energy, which is based on oil and gas par prices for the previous calendar quarter.

To claim the Alberta royalty credit, complete an Alberta Royalty Credit and Alberta Tax Refunds Application for Individuals (form AT60) and submit it, with documentation to support the claim, to TRA. Examples of supporting documentation include joint venture billings, operator statements, and partnership allocation statements.

To be entitled to the credit, your complete application (AT60 and satisfactory supporting documentation) for a taxation year must be received by TRA no later than three years after the year end. By law, applications received after the three-year deadline cannot be processed.

Compound interest will be paid at the prescribed rate on the credit from the later of the date:

• the application was received at TRA, or
• three months from the end of the taxation year,

to the date the credit is paid.

Your complete application will be reviewed and the amount of Alberta royalty credit determined by TRA. A Notice of Determination advising you of the amount of the credit, and interest, if any, will be sent to you.

If you do not agree with the decision indicated in the Notice of Determination, you should first discuss the matter with TRA Information Services by calling one of the telephone numbers listed above. If the outcome of this discussion is not satisfactory, you may formally object to the determination made by filing a Notice of Objection by registered mail to:

TAX SERVICES
TAX AND REVENUE ADMINISTRATION
9811 109 ST
EDMONTON AB T5K 2L5

The objection will be reviewed impartially and you will be advised of the result of the review. The objection must be received by TRA within 90 days of the mailing of the Notice of Determination.

Records and Books

Individuals claiming the Alberta royalty credit are required by section 61 of the Alberta Corporate Tax Act to keep records and books of account to support their claims. These records are subject to review by TRA auditors.

By policy, TRA permits an individual to locate records and books elsewhere in Canada. If an individual wishes to maintain the records and books outside Canada, written permission must be obtained from TRA to do so.

If an individual has received permission to keep records outside of Canada, s/he must, upon TRA's request and at his/her own cost, forward the records and supporting documentation to TRA or a business location in Canada, or arrange to have TRA audit staff visit at the location of the records. The individual will be responsible for absorbing the incremental costs incurred by TRA in sending auditors outside Canada. Information Circulars CT-13 (Records and Books) and CT-10 (The Tax Audit) provide further details on these subjects.

If an auditor believes a revision to the credit is justified, TRA will provide you with an explanation of all proposed changes. You will be given reasonable time to respond to the proposals and discuss them with TRA.

If your Alberta royalty credit is reduced from the amount initially determined, you will be assessed interest calculated from the initial process date to the assessed date on any overpayment. If there is an increase in the Alberta royalty credit entitlement for a taxation year, interest will be paid to you on the additional credit. Interest will be calculated from the later of

•  the day on which the complete application was received at TRA, or

•  the end of the third month of the year after the taxation year,

A Notice of Determination reporting any changes to the credit and the amount of interest, if any, will be sent to you.

COMPLETION OF THE APPLICATION FORM

This form is to be completed by individuals claiming the Alberta royalty credit. The completed form together with supporting documentation must be submitted to the address noted at the top of the form.

On line 2, provide your usual mailing address, including the country code.

The most often used Country codes are:

If your country code is not listed above, please contact TRA's Information Services office at (780) 427-3044. If calling long distance within Alberta, telephone 310-0000 then enter (780) 427-3044.

If there is another address to which the Notice of Determination is to be sent, enter it on line 3.

Lines 6 and 7: Taxation Year

Provide the year, month and day of both the beginning and end of your taxation year. A trust or estate may have a taxation year that is not the same as the calendar year. For other individuals, the taxation year is always the calendar year.

TRA has assigned a new Business Identification Number (BIN) to all Alberta royalty credit applicants. Please use this BIN on all future applications to, and correspondence with, TRA. These numbers will be used by TRA on all correspondence regarding your account.

For first time filers, TRA will assign a BIN when the claim is received and that number will appear on your Notice of Determination.

Provide your Social Insurance Number if you are a Canadian resident. If you are not, and you have filed before, please use your BIN. Trusts and estates should leave this line blank.

The year, month and day of your birth will assist TRA in identifying you. Trusts and estates should leave this line blank.

TRA's data base for Alberta royalty credit claimants has been developed from data received on previous claims submitted to TRA. Nofity TRA any name change to enable us to update our database and ensure timely processing o fyour application.

Complete line 11A only if you have indicated "1 - Yes" on line 11.

On line 12, enter your share of the total Alberta crown royalty on production from Alberta oil and gas wells in which you have a working interest.

Alberta crown royalty consists of certain royalties receivable by, or payable to, the Government of Alberta under an agreement granting petroleum, natural gas, or petroleum and natural gas rights.

Excluded from Alberta crown royalty:

a) freehold royalties;

b) royalties paid to governments other than the Alberta government, including royalties for production from wells on Indian lands within Alberta;

c) royalty income received by the individual;

d) Alberta crown charges (other than crown royalties); e.g., freehold mineral taxes, lease rentals and bonuses and interest on overdue royalties, and  

e)  royalties on production from any interest in a restricted resource property, as described in the following paragraph.

There are two types of property that qualify as "restricted resource property":

a) an oil or gas well with a finished drilling date on, or before, August 24, 1982 that, on August 24, 1982, was owned by:

• an above-limit corporation that, in itself or as part of an associated group, was at the maximum credit at that time, or
• a partnership of such corporations; or

b) a well that, after April 7, 1986 and after the finished drilling date of the well, was disposed of by:

• a restricted corporation that, in itself or as part of an associated group, was at its maximum credit in the previous taxation year, or
• by a restricted partnership with restricted corporations as partners.

A "crown royalty shelter" is the maximum amount of Alberta crown royalty on which the Alberta royalty credit may be claimed in a year. The crown royalty shelter for a year is $2,000,000 for taxation years ending in 1995 or later. Please refer to the Alberta Royalty Credit and Alberta Tax Refunds Application for Individuals (form AT60) for information about the calculation.

For a taxation year less than 365 days, divide the number of days in the taxation year by 365, then multiply the result by $2,000,000. Enter this amount at line 14.

The Alberta royalty credit rate is established quarterly by a formula set out in the Regulations to the Alberta Corporate Tax Act . The rate is a function of the royalty tax credit reference price that, in turn, is a function of oil and gas par prices for the previous calendar quarter.

The quarterly rates must be converted into an annual equivalent for year-end credit claims. Calculate the annual equivalent, the "weighted average rate", by multiplying each specified rate in effect during the taxation year by the number of days in the taxation year for which that particular rate was in effect and dividing by the total number of days in the taxation year. Total together the resulting amounts of all quarters claimed.

Individuals with a calendar taxation year should use the rate given on the form for determining the Alberta royalty credit. Those with taxation years other than a calendar year must use the following information to calculate their weighted average rate:

To reduce processing costs, applications for Alberta royalty credit refunds of less than $20.00 are not normally processed or paid, unless TRA is specifically requested to do so.

Please ensure that the name of the person signing the application signatory is printed in the space provided and that you have indicated a telephone number where you can be contacted should TRA have questions concerning your application.