WHEREAS municipal governments have been applying for the Alberta Fuel Tax Rebate on clear diesel for at least 15 years; and

WHEREAS the regulations allowed the municipality to take actual hours of use on a “survey” of the equipment with a blanket 10% deduction from that total for idle time.  The applicant was not required to submit the supporting information with the application; and

WHEREAS on April 1, 2007 The Alberta Government changed the rules for fuel tax rebates on clear diesel; and

WHEREAS the new regulations provide two options for calculating fuel consumption – engine diagnostic download method or the fuel consumption testing method; and

WHEREAS both options are expensive – one in the purchase of the electronic control modules for equipment that does not come equipped with it and two in the staff time required to undertake the fuel consumption testing; and

WHEREAS Alberta Tax and Revenue has a “simplified process” for claiming a tax rebate available for geophysical contractors, oil well drilling contractors and petroleum producers; and

WHEREAS this “simplified process” is not currently available to municipal governments;

THEREFORE BE IT RESOLVED that the Alberta Association of Municipal Districts and Counties urge the Province of Alberta to amend the regulations for fuel tax rebates on clear diesel making municipal governments eligible to use the “simplified process” for applying for the fuel tax rebate.

On April 1, 2007, Tax and Revenue for the Alberta Government changed the rules for fuel tax rebates on clear diesel.

Under the rules prior to April 1, 2007, the M.D. of Pincher Creek No. 9 (M.D.) – and I believe other municipalities – were allowed to record the equipment hours from January 1st  to December 31st and use the manufacture’s average fuel consumption rate per hour with a deduction of 10% for idle time.  This method would involve 2 – 3 days times to make the application for the rebate.

Under the rules effective April 1, 2007, an application for a rebate must be made every 3 months with documentation of actual fuel consumption from either:

1. The ECM computer on newer equipment, or
2. A survey for 30 days recording the hours the equipment worked and fuel consumption per hour under idle, travel and work conditions.  The consumption test for each condition is a minimum of 5 hours per unit.

Only the newer graders the M.D. has will have the information available from the ECM. 

A survey of the older equipment for fuel consumption will have to be done for each unit that uses diesel as well as any other equipment the M.D. might purchase in the future.  The survey will have to be updated once a year and revised every time another piece of equipment is added or removed from the M.D.’s fleet.  It is estimated that the time required for applying the new rules would be 8 days a year (2 days per quarter) plus the time required by each employee to document the information required for approximately.

The M.D. of Pincher Creek could apply for a new Tax Exempt Fuel User (TEFU) number and use marked fuel in all of the off road equipment and continue to use clear fuel in the licensed vehicles.  To satisfy the requirement for marked fuel, the M.D. would have to:

1. Determine fuel consumption rate for every unit and purchase meters for all slip tank pumps at a cost of $250.00 for each slip tank to record the fuel consumed.
2. Track hours idling, traveling and work on each unit.
3. Calculate the consumption on each unit and record on the TEFU Application.

The M.D. has the following concerns with the application process required under the rules effective April 1, 2007:

1. The record keeping and how the information request will be viewed by the staff.  The employees may feel that the actual idle time would not look good on the time sheet and, therefore, not record the actual time the unit was idling.
2. Some licensed vehicles could end up using marked fuel. The M.D. is required to sign a statement in the TEFU application that all marked fuel is used for off road use only.

Tax and Revenue currently has a “simplified process” for claiming a tax rebate that applies to geophysical contractors, oil well drilling contractors and petroleum producers.  Under this procedure the claim is based on litres consumed multiplied by a prescribed percentage for the equipment category.  At this time municipalities are not included as being eligible to use the “simplified process”.

Resolution 32-05F: THEREFORE BE IT RESOLVED that the Alberta Association of Municipal Districts and Counties request the Province of Alberta eliminate the provincial portion of tax on fuel used in municipal operations.

See also the Fall 2008 resolution Rural Residents Fuel Rebate Program.

Finance and Enterprise: Tax and Revenue Administration (TRA) is consulting with another industry sector to negotiate rates for the Prescribed Rebate Off-Road Percentages (PROP) Program in 2009/10.  Accordingly, TRA is unable to engage another industry group in consultation at this time. TRA will take this resolution as an indication of the AAMDC’s interest in pursuing inclusion in the PROP Program.  TRA will follow up with the AAMDC and other interested groups to confirm their availability when it initiates consultation with another group.

In 2010, there was a great deal of study and effort put in to including municipalities in the PROP program for a simpllified rebate process. In July of 2010, this process was put in place, fulfilling this resoltuion. However, in the 2011-2012 budget announced by the Government of Alberta, the entire Tax Exempt Fuel Use Rebate Program was cancelled. This did not affect the marked fuel program, but municipalities and industry are no longer able to access any rebate on clear fuel.