• Tax Exempt Fuel

Tax Exempt Fuel User Information and Forms

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The Fuel Tax Act allows a consumer to obtain a fuel tax rebate for Alberta tax-paid fuel consumed for commercial purposes at off-road locations in Alberta in the following eligible vehicles or equipment:

a. licensed motor vehicles,
b. licensed refrigerated (reefer) units, or
c. unlicensed equipment (subject to specific criteria detailed in this circular).

TAX EXEMPT FUEL USER PROGRAM

The Tax-Exempt Fuel User Program encompasses two separate components as detailed below:

a. Marked fuel - A consumer with a TEFU certificate may obtain marked gasoline and diesel exempt of tax at the time of purchase. An entity may apply for a TEFU certificate by completing a "Declaration of Tax Exempt Fuel User Application" (AT321) and submitting it to Tax and Revenue Administration (TRA) for approval. If approved, the entity is provided a TEFU certificate and is entitled to purchase tax-exempt (marked) fuel for use in unlicensed equipment owned by the entity, or for heating, as set out in the Alberta Fuel Tax Act. Any entity operating unlicensed equipment or vehicles must use marked tax-exempt fuel in those units to obtain a tax benefit unless, in TRA's opinion, marked fuel is not reasonably available.

b. TEFU rebate applications - Consumers of clear fuel that have successfully enrolled with TRA can apply for a rebate of the Alberta tax paid on the litres consumed in an off-road capacity for commercial purposes in eligible vehicles or equipment. TEFU applicants are required to submit the "Fuel Tax Rebate Enrolment Application" (AT4940) to TRA, prior to filing their first TEFU rebate application for periods after March 31, 2007. With the implementation of the PROP program, enrolment is particularly necessary to establish eligibility and ensure that applications filed under TEFU are not for PROP-eligible activities after the industry implementation date. Please also refer to Information Circular PROP-1, Prescribed Rebate Off-road Percentages (PROP), for program details and requirements.

To claim a TEFU rebate for unlicensed equipment, the applicant must have had a valid TEFU certificate at the time the fuel was purchased and satisfy TRA that marked tax-exempt fuel was not reasonably available as a result of either:

a. no bulk fuel dealer with marked fuel available for sale located within a 50-kilometre radius of the off-road location; or

b. the fuel was being consumed in an off-road operation where clear fuel must be used and there existed a legal restriction (e.g., zoning), prohibiting the consumer from having more than one storage tank.

PROP - TRA has been actively working with industry to simplify the administration of the TEFU program. The Fuel Tax Regulationwas amended in 2004 allowing for the implementation of a simplified process for calculating, and applying for fuel tax rebates (Information Circular PROP-1, Prescribed Rebate Off-road Percentages). Applicants using clear gasoline, diesel or liquefied petroleum gas (LPG) off-road, in a prescribed industry sector, must use the PROP application process for all fuel purchased on or after the implementation date for that sector. Some applicants are entitled to apply for rebate under both TEFU and PROP for the same period, as discussed in the "Complex Entities" section of this information circular.

If you carry on PROP eligible activities after the PROP industry implementation date AND you also carry on non-PROP (TEFU) eligible activities, you must obtain a determination from TRA whether you are eligible to file claims under one or both programs.

To obtain a determination of program eligibility, submit a completed Fuel Tax Rebate Enrolment Application (AT4940) to TRA to outline both your PROP and TEFU activities. Please refer to Information Circular PROP-1, Prescribed Rebate Off-road Percentages (PROP), for program details.

Please provide a clear description in field number 14 of the Fuel Tax Rebate Enrolment Application (AT4940) for all operational activities and their related industries. If there is not sufficient space attachments are encouraged. To compliment your description of activities you may attach copies of relevant materials.

You will be contacted to discuss your particular fuel tracking methods for the different activities you perform. TRA will then advise you if you should claim under one or both programs.

The consumer must also reconcile the fuel when claims are made under both programs in a manner approved by TRA. (See "Dual TEFU/PROP Applicants" section below for details.)

There are other rebates, not related to off-road use, available under the TEFU program. See Information Circular TEFU-4, Miscellaneous Rebates, for more information.


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