Fuel Tax Overview

A new Fuel Tax Act was passed in the 2006 spring session of the Alberta Legislature. Along with the approval of the Regulation and a Transitional Regulation, the Act was proclaimed on March 21, 2007. All provisions under the Act and both Regulations take effect on April 1, 2007. Information circulars and other publications have been revised to reflect this change.

To view publications and forms under the new Act and Regulations, see Fuel Tax Act - NEW. To view publications and forms under the old Fuel Tax Act, see Fuel Tax Act - OLD.

Tax and Revenue Administration (TRA), Alberta Finance and Enterprise, administers the 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.

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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.

See Information Circular FT-2 for the fuel tax rates.

Tax Exempt Fuel Use (TEFU)

Alberta provides tax exemptions and rebates on fuel used off-road for commercial purposes. 

Prescribed Rebates Off-road Percentages (PROP)

Alberta Finance and Enterprise, Tax and Revenue Administration (TRA) and several industry sectors have agreed 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 nine cents per litre on both diesel and gasoline and 6.5 cents per litre on propane, and a subsidy of six cents per litre on diesel.

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