and Revenue Administration
Special Notice Vol. 1 No. 23
||August 30, 2007
||Alberta Treasury Board and Finance,
Tax and Revenue Administration
|For more information:
1 No. 23 / August 2007
FUEL TAX ACT SPECIAL NOTICE:
MARKED FUEL ACQUIRED OR SUPPLIED
NOTE: This special notice is intended to explain legislation and provide specific information. Every effort has been made to ensure the contents are accurate. However, if a discrepancy should occur in interpretation between this Special Notice and governing legislation, the legislation takes precedence.
Companies with operations in remote locations often provide contractors operating in the construction, oilfield, mining and logging industries with fuel as compensation when working in remote locations. However, marked fuel may only be used for eligible purposes and/or in unlicensed vehicles and equipment. If you supply or acquire marked fuel, please note the following and refer to Information Circular FT-4, “Sale of Tax-exempt Fuel” for more information.
Definitions of “Sell” and “Vendor”
The Fuel Tax Act (Act) defines “sell” as “to sell or otherwise supply fuel, with or without receiving consideration” and anyone who “sells” fuel in Alberta to a consumer is a “vendor”. The Act also defines “purchase” as “to purchase or otherwise obtain fuel with or without giving consideration.”
Vendors' Responsibility in Marked Fuel Transactions
Anyone who sells (which includes “supply”, as defined by the Act) marked fuel in Alberta is required to register with Tax and Revenue Administration (TRA) as a vendor of marked fuel.
The vendor is required to ensure marked fuel is being sold only to a consumer eligible to purchase it. A valid fuel tax exemption certificate is acceptable verification. See Information Circular FT-3, “Fuel Tax Exemption Certificates ”. The vendor must also take reasonable measures to ensure the marked fuel is being used for eligible purposes such as consumption in unlicensed commercial equipment (e.g., backhoes, trenchers, earthmovers).
The Act requires a vendor to issue an invoice for fuel supplied. The invoice must include the name and address of the vendor, name of the purchaser, date of the sale, date the fuel was dispensed, invoice number, type and quantity of fuel supplied.
There are a number of penalties for misuse of marked fuel, ineligible sales, failure to report marked fuel sales, and failure to register as a vendor. See information circulars FT-10, “Offences and Related Penalties” , and FT-12, “Fuel Sellers” , for details.
A consumer who purchases (which includes “obtains”, as defined by the Act) marked fuel in Alberta, but does not use it for eligible purposes is liable for the tax that would have been paid on the amount of fuel used for the ineligible purposes. The consumer is also guilty of an offence and liable to a fine up to $1000 for a first offence; and a fine up to $5000 and/or a term of imprisonment up to six months for a subsequent offence.
Joint and Several Liability
The vendor and consumer are jointly and severally liable for the tax that would have been paid on clear fuel, where marked fuel was supplied to an ineligible consumer or the vendor knows, or ought to know, that the fuel will not be used for eligible purposes. The vendor is also guilty of an offence and liable to a fine up to $10,000 and/or a term of imprisonment up to six months for the first offence; and a fine up to $25,000 and/or a term of imprisonment up to one year for subsequent offences. See Information Circular FT-10R1, “Offences and Related Penalties ” for details.
TRA will issue assessments to recover fuel taxes from ineligible sales of marked fuel. The Act also provides for a penalty equal to 50 per cent of the amount assessed. Penalties may not be imposed if vendors and/or consumers voluntarily disclose the amount of marked fuel sold to ineligible consumers and marked fuel used for ineligible purposes.
A voluntary disclosure will be considered acceptable only if it is verifiable by TRA and the taxpayer:
- initiated the disclosure before TRA took compliance or audit action;
- provided complete, accurate and all information relating to the deficiency;
- paid the total amount of all taxes owing from the disclosure; and
- paid a reasonable estimate of the associated interest.
See Information Circular CT-11R1, “Voluntary Disclosures” , for details about the criteria for a voluntary disclosure.