Preparing for the Alberta Carbon Levy

Transcription

1 Preparing for the Alberta Carbon Levy Alan L. Ross, Regional Managing Partner, Borden Ladner Gervais LLP Beverly Gilbert, Borden Ladner Gervais LLP Tax Group Kim Berjian, ConocoPhillips Canada Bruce Lawrence, Partner, Borden Ladner Gervais LLP June 2, 2016

2 Outline of Presentation 1. Overview 2. Imposition of Carbon Levy 3. Exemptions and Exceptions 4. Administrative Scheme: a. Application for exemption b. Remittance of carbon levy c. Registration d. Duty to maintain records 5. Assessment and Appeals 6. Questions 2

3 Overview Policy Roadmap 2016 Alberta Budget Bill 20, Climate Leadership Implementation Act Other Jurisdictions 3

4 Background to Carbon Levy Specified Gas Emitters Regulation ( SGER ) 2015 SGER Amendments Climate Change Advisory Panel Climate Leadership Report Climate Leadership Plan Alberta Budget 2016 Bill 20, Climate Leadership Implementation Act 4

5 Alberta Budget 2016 Large Final Emitters $20/tonne January 1, 2016 $30/tonne January 1, 2017 Carbon Levy - Fuels $20/tonne January 1, 2017 $30/tonne January 1, 2018 Economy-wide changes covering 78-90% of Alberta s GHG emissions 5

6 Bill 20 Overview Proposes two new statutes and amends three existing statutes Economy wide carbon pricing regime through a carbon levy Rebate program Reduction to small business corporate tax rate Uses of carbon levy revenues Establishes energy efficiency Alberta as a Crown corporation 6

7 Bill 20 Carbon Levy What will the carbon levy apply to? How is the levy administered? Exemptions Enforcement 7

8 Bill 20 What is the Levy Applied to Apply to purchases of all fossil fuels that produce GHG emissions when combusted Applied as a price per tonne of GHG emissions which translates into a levy expressed as a price per volume of fuel Fuel imported into Alberta, sold within Alberta, removed from infrastructure or flared or vented in Alberta In some cases, may apply when fuel is consumed within Alberta 8

9 Bill 20 How is the Levy Administered Collected in same way as Alberta Fuel Tax? Gasoline / diesel included in price paid by customers Natural gas separate line item in customers bills Other fuels fuel-specific and depends upon how the product is produced, distributed and sold Bill 20 imposes payment obligations throughout the supply chain 9

10 Bill 20 - Exemptions SGER / Performance Standards Natural Gas Produced / Consumed Onsite Market Gas and Diesel Biofuels 10

11 Bill 20 Exemptions (Continued) Inter-jurisdictional Flights Indigenous Use Certain Fuel to be Delivered to a Refinery or Terminal Export / Other Exemptions 11

12 Bill 20 Enforcement Potential Directors Liability Registration Requirements Inspection Powers Without Warrant Collection Powers Penalties 12

13 Other Jurisdictions British Columbia Started low and rose gradually Revenue-neutral Quebec & Ontario Cap-and-trade system Role of Federal Government International Obligations / COP21 13

14 Alberta Rates on Certain Fuels Type of Fuel Carbon levy rate for 2017 Carbon levy rate for 2018 and subsequent years Butane 3.26 /L 5.34 /L Diesel 5.35 /L 8.03 /L Gas Liquids 3.33 /L 4.99 /L Gasoline 4.49 /L 6.73 /L Kerosene 5.14 /L 7.71 /L Low heat value coal $35.39/tonne $53.09/tonne Natural gas $1.011/GJ $1.517/GJ Propane 3.08 /L 4.62 /L Refinery gas 3.77 /m /m 3 14

15 Imposition of Carbon Levy Important Definitions Section 1: consumer recipient retail dealer vendor person purchase fuel sell use direct remitter (s. 25) Schedule: gasoline diesel butane gas liquids pentanes plus/condensate 15

16 Imposition of Carbon Levy Section 4 Carbon levy on general fuels Sections 5 to 7 Carbon levy on interjurisdictional carriers, locomotive diesel and aviation fuels Section 8 Carbon levy on natural gas Section 9 Carbon levy on miscellaneous fuels Section 10 Carbon levy on use by direct remitters 16

17 Imposition of Carbon Levy Section 4 Carbon levy on fuel generally: "Recipients" pay carbon levy at the applicable rate (as set out in a Schedule to the legislation) at time they: 1. Purchase; 2. Import for purpose of sale or combustion in a fuel system; 3. Sell or remove fuel from certain facilities or specified gas emitter; 4. Flare or vent fuel; or 5. Engage in prescribed activity (Regulations to come) Remittance occurs under section

18 Imposition of Carbon Levy Section 4 No carbon levy payable at the time fuel is: Imported for delivery to a refinery or terminal Purchased by a recipient that i. operates a refinery, or ii. manufactures, refines, acquires in, or imports into, Alberta at least 500 million litres of clear fuel annually from a recipient described in (i) or (ii) for delivery to a refinery or terminal Exported from Alberta in bulk Purchased exempt under s. 15 Moved in between certain oil/gas systems/facilities Purchased by the holder of a s. 18 license 18

19 Imposition of Carbon Levy Section 8 Carbon Levy on Natural Gas: 1. When a recipient sells, removes or purchases the natural gas from a battery, gathering system, processing facility, gas well, oil battery, oil production site, oil sands processing plant or straddle plant other than movement of gas between certain facilities, transmission pipelines or gas distribution systems. 2. Where recipient sells, removes or purchases gas from a transmission pipeline unless gas is being moved into natural gas distribution system or straddle plant or subject to an exemption. 3. Where recipient sells, removes or purchases gas from a natural gas distribution system unless gas is purchased exempt. 19

20 Imposition of Carbon Levy Section 8 Carbon Levy on Natural Gas: 4. Where a recipient imports raw gas or natural gas into Alberta that, without first having been sold or resold in Alberta is put, into a fuel system that produces heat or energy or is flared or vented. All remitted in accordance with section 25 natural gas distributors remit the levy payable pursuant to (3) on previous slide. 20

21 Imposition of Carbon Levy Section 9 Carbon Levy on Miscellaneous Fuels: Consumers of coke oven gas, refinery gas, low and high heat value coal, petroleum coke and coal coke pay carbon levy at time of purchase or import of fuel which is used in a fuel system. Section 10 Carbon Levy payable by direct remitters (defined in subsection 25(1)): Recipients which are direct remitters pay carbon levy on their own use of fuel. Remit under section

22 Exemptions and Exceptions Section 15 contains a list of purchases by a consumer which are exempt from the levy. Exemptions include: Holding a valid exemption certificate Use of fuel in a specified gas emitter Use of fuel before 2023 in accordance with regulations Use of fuel for prescribed purposes (regulations to come) Fuel marked for farming operations Fuel used as a raw material Providing prescribed evidence of exemption 22

23 Administrative Scheme - Exemption Consumer Exemption Certificates: Application to Minister available Minister must provide reasons for refusal Prescribed evidence of exemption not yet clear Minister may issue without application Allows consumer to purchase fuel exempt for prescribed purpose or use Duty of Vendor: Vendor must not collect carbon levy from exempt consumers Vendor liable to pay amount to Crown if carbon levy is collected from exempt consumer 23

24 Administrative Scheme - Exemption Recipient Exemption for License: Application to Minister required Available where recipient would regularly be entitled to refunds or credits Allows purchase of fuel without imposition of carbon levy Minister may refuse to issue, suspend or cancel licences Minister required to give reasons 24

25 Administrative Scheme - Remittance Section 25 of CLA outlines duty to remit and defines who is a direct remitter. Questions to ask: 1. Are you a direct remitter making a first supply? If so, you generally remit the carbon levy to the crown. If not, you generally remit the carbon levy to the supplier of fuel. 2. Which section imposes the relevant levy? Direct remitters purchasing fuel which is subject to the levy pursuant to sections 4, 8 or 9 remit to the supplier of fuel. 3. Are you an inter-jurisdictional carrier? If so, remittance of carbon levy occurs at same time and in same manner as Fuel Tax. 25

26 Administrative Scheme - Remittance Who Remits to the Crown? Generally: Direct remitters subject to carbon levy under sections 4, 6, 7, 8, 9(2)(b) and (4) on first sale where applicable; and Recipients liable for carbon levy under sections 12, 13, 17, 21, 22 and 23. Who Remits to the Supplier? Generally: Direct remitters subject to carbon levy under sections 4, 8 and 9 on second and subsequent sales ; and Recipients other than direct remitters. 26

27 Administrative Scheme - Remittance Recovery, Refunds and Credits: Recipients that are not consumers generally recover carbon levy from purchaser when fuel is sold. If carbon levy is paid but fuel is then exported in bulk, sold exempt, stolen, destroyed or rebranded, the Minister may provide a refund or credit upon application. Consumers are eligible for rebates where fuel is used for prescribed purposes. Also eligible for refunds or credits in narrow circumstances (export of aviation fuel). 27

28 Administrative Scheme - Registration Section 27 contains a broad list of activities that require registration under the CLA, including: Producing, processing or refining fuel; Flaring or venting fuel. Failure to register or loss of registration results in inability to carry out listed activities. Registration can be cancelled or refused if carbon tax legislation has been contravened. 28

29 Administrative Scheme - Records CLA and regulations impose a positive duty to keep certain records for 6 years from end of the year in which the record was created. Minister will have broad powers to compel records, inspect premises and search motor vehicles. Information collected under the CLA may be shared with the Federal Government, other provinces and other jurisdictions as is considered necessary. 29

30 Assessment and Appeals Minister may assess / reassess within 4 years from the end of a given calendar year for carbon levy which a direct remitter failed to remit. Limitation period does not apply if there has been fraud or misrepresentation attributable to neglect, carelessness or wilful default. Gross negligence penalties of 50% may apply. Directors and agents can be liable for failure to remit in certain circumstances. 30

31 Assessment and Appeals 90 day time limit to file a notice of objection. Initial stage in objection process is reconsideration by Minister unless NOO states that immediate appeal to court is desired and Minister consents. Second stage in process is filing notice of appeal to the Court of Queen s Bench. Court has broad powers in respect of appeal. May vary assessments and order Minister to take certain actions under the CLA. 31

32 Disclaimer The content of this presentation is intended to provide general information only, and does not constitute the provision of legal or other professional advice. Attendees are encouraged to seek and obtain proper legal advice from a competent professional regarding their particular circumstances. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means without the prior written permission of the authors. 32

33 33 Questions?

34 34 Thank you

35 BLG Contacts Alan Ross Regional Managing Partner, BLG T F ARoss@blg.com Bev Gilbert National Leader Commodity Tax Group, BLG T F BGilbert@blg.com Bruce Lawrence Partner, BLG T F BLawrence@blg.com Colin Poon Associate, BLG T F CPoon@blg.com 35