FREEHOLD MINERAL RIGHTS TAX REGULATION

Transcription

1 Province of Alberta FREEHOLD MINERAL RIGHTS TAX ACT FREEHOLD MINERAL RIGHTS TAX REGULATION Alberta Regulation 223/2013 With amendments up to and including Alberta Regulation 171/2017 Office Consolidation Published by Alberta Queen s Printer Alberta Queen s Printer Suite 700, Park Plaza Avenue Edmonton, AB T5K 2P7 Phone: Fax: qp@gov.ab.ca Shop on-line at

2 Copyright and Permission Statement Alberta Queen's Printer holds copyright on behalf of the Government of Alberta in right of Her Majesty the Queen for all Government of Alberta legislation. Alberta Queen's Printer permits any person to reproduce Alberta s statutes and regulations without seeking permission and without charge, provided due diligence is exercised to ensure the accuracy of the materials produced, and Crown copyright is acknowledged in the following format: Alberta Queen's Printer, 20.* *The year of first publication of the legal materials is to be completed. Note All persons making use of this consolidation are reminded that it has no legislative sanction, that amendments have been embodied for convenience of reference only. The official Statutes and Regulations should be consulted for all purposes of interpreting and applying the law.

3 (Consolidated up to 171/2017) ALBERTA REGULATION 223/2013 Freehold Mineral Rights Tax Act FREEHOLD MINERAL RIGHTS TAX REGULATION Table of Contents Part 1 General 1 Definitions 2 Exemption Part 2 Tax 3 Establishment of unit values 4 Calculation of tax payable 5 $1600 reduction in tax payable 6 Exemption from tax 7 Order reducing tax payable 8 Prescribed date for payment of tax 9 Prescribed date for sending tax statement 9.1 Error in tax statement 10 Notice of objection to tax 10.1 Review of an objection 11 Interest on unpaid tax 12 Multiple ownership Part 3 Administration and Enforcement 13 Requirement to keep records 14 Penalty for failing to comply with Minister s direction 14.1 Notice of Objection to penalty for failure to comply with direction 14.2 Review of an objection 15 Confidentiality 16 Service of documents Part 4 Repeal, Expiry and Coming into Force 17 Repeal

4 Section 1 FREEHOLD MINERAL RIGHTS TAX REGULATION AR 223/ Expiry Schedules Definitions 1 In this Regulation, Part 1 General (a) Act means the Freehold Mineral Rights Tax Act; (a.1) applicant means (i) for the purpose of an objection under section 4(1) of the Act, an owner or a person prescribed under section 10, and (ii) for the purpose of an objection under section 8.1(2) of the Act, a person against whom the Minister has assessed a penalty under section 8.1(1) of the Act; (b) condensate means a mixture mainly of pentanes and heavier hydrocarbons (i) that may be contaminated with sulphur compounds, (ii) that is recovered or is recoverable at a well from an underground reservoir, and (iii) that may be gaseous in its virgin reservoir state, but is liquid at the conditions under which its volume is measured or estimated; (c) crude bitumen means a naturally occurring viscous mixture, mainly of hydrocarbons heavier than pentane, (i) that may contain sulphur compounds, and (ii) that in its naturally occurring viscous state, will not flow to a well; (d) crude oil means a mixture mainly of pentanes and heavier hydrocarbons (i) that may be contaminated with sulphur compounds, (ii) that is recovered or is recoverable at a well from an underground reservoir, and 2

5 Section 1 FREEHOLD MINERAL RIGHTS TAX REGULATION AR 223/2013 (iii) that is liquid at the conditions under which its volume is measured or estimated, and includes all other hydrocarbon mixtures so recovered or recoverable except gas, condensate or crude bitumen; (e) designated payor, in relation to a taxable mineral right, means the designated payor recorded in the Electronic Transfer System for that taxable mineral right; (f) Electronic Transfer System means the electronic information system administered by the Department and called the Electronic Transfer System; (g) heavy oil means the category of crude oil determined under section 2 of Schedule A as heavy oil; (h) light oil means the category of crude oil determined under section 2 of Schedule A as light oil; (i) natural gas right means an estate in fee simple in natural gas located in a tract; (j) operator, in relation to a taxable mineral right, means a person who is responsible for conducting a drilling, development or production operation for the recovery of the taxable mineral from the tract; (k) petroleum right means an estate in fee simple in petroleum located in a tract; (l) production entity means (i) a drilling spacing unit, to the extent that the drilling spacing unit is not included in an area described in subclause (ii), and (ii) a unit area under a unit agreement or unit operation order; (m) production entity administrator, in relation to a production entity for a taxable mineral right, means the production entity administrator recorded in the Electronic Transfer System for that production entity; (n) raw gas means a mixture containing methane, other paraffinic hydrocarbons, nitrogen, carbon dioxide, hydrogen sulphide, helium and minor impurities, or some of them, (i) that is recovered or is recoverable at a well from an underground reservoir, and 3

6 Section 1 FREEHOLD MINERAL RIGHTS TAX REGULATION AR 223/2013 (ii) that is gaseous at the conditions under which its volume is measured or estimated; (o) recorded lessee, in relation to a taxable mineral right, means a person recorded in the Electronic Transfer System as a recorded lessee in respect of that taxable mineral right; (p) solution gas means (i) gas that is separated from crude oil or crude bitumen after recovery from a well event, (ii) gas that is dissolved in crude oil under initial reservoir conditions and includes any of that gas that evolves as a result of changes in pressure or temperature, or both, due to human disturbance, and (iii) gas that is dissolved in bitumen under initial reservoir conditions and includes any of that gas that evolves as a result of changes in pressure due to human disturbance but does not include gas produced through chemical alteration of crude bitumen using high temperature, high pressure, a catalyst or otherwise; (q) well event means (i) a part of a well completed in a zone and given a unique well identifier by the Alberta Energy Regulator, (ii) parts of a well completed in 2 or more zones and given a single unique well identifier by the Alberta Energy Regulator, (iii) a part of a well completed in and recovering petroleum or natural gas from a zone but which has not yet been given a unique well identifier by the Alberta Energy Regulator, or (iv) parts of a well completed in and recovering petroleum or natural gas from 2 or more zones during the period when the parts are considered by the Minister as a single well event for the purposes of this Regulation and before the Alberta Energy Regulator makes a decision whether or not to give the parts a single unique well identifier. AR 223/2013 s1;167/2015 4

7 Section 2 FREEHOLD MINERAL RIGHTS TAX REGULATION AR 223/2013 Exemption 2 All mineral rights other than petroleum rights and natural gas rights are exempt from the provisions of the Act. Part 2 Tax Establishment of unit values 3(1) The Minister shall establish the following values to be used in calculating the tax payable with respect to petroleum rights for a taxation year: (a) an amount per cubic metre as the unit value for light oil; (b) an amount per cubic metre as the unit value for heavy oil; (c) an amount per cubic metre as the unit value for crude bitumen; (d) an amount per gigajoule as the unit value for solution gas. (2) The Minister shall establish the following values to be used in calculating the tax payable with respect to natural gas rights for a taxation year: (a) an amount per gigajoule as the unit value for raw gas; (b) an amount per cubic metre as the unit value for condensate. (3) Notwithstanding subsections (1) and (2), the Minister may, on application by the recorded lessee in respect of a petroleum or natural gas right, establish a unit value with respect to the petroleum or natural gas right in accordance with the unit value submission guidelines established by the Minister. (4) In determining the value per unit of a mineral pursuant to this section, the Minister may have regard to any matters the Minister considers relevant. Calculation of tax payable 4(1) The tax payable in respect of a petroleum right for a taxation year shall be calculated in accordance with Schedule A. (2) The tax payable in respect of a natural gas right for a taxation year shall be calculated in accordance with Schedule B. 5

8 Section 5 FREEHOLD MINERAL RIGHTS TAX REGULATION AR 223/2013 $1600 reduction in tax payable 5(1) The Minister may reduce the tax payable in respect of a petroleum right in a taxation year by an amount not exceeding $1600 per each person who is an owner of the petroleum right on December 31 of that taxation year. (2) The Minister may reduce the tax payable in respect of a natural gas right in a taxation year by an amount not exceeding $1600 per each person who is an owner of the natural gas right on December 31 of that taxation year. Exemption from tax 6(1) No tax is payable by an owner for a taxation year in respect of that owner s taxable mineral rights within a single tract if the entire amount of tax otherwise payable by the owner in respect of those mineral rights in that tract for that taxation year, after any reduction under section 5, is less than $100. (2) No tax is payable in respect of a taxable mineral right for a taxation year if a royalty is payable to the Crown in that year on the mineral to which the tax relates by reason of a reservation of the royalty contained in the certificate of title to the mineral right. Order reducing tax payable 7 Where in the Minister s opinion it is necessary or desirable in the interests of conservation or of maintaining or increasing the recovery of a mineral, the Minister may by order prescribe (a) a tax payable with respect to the taxable mineral right that is less than the tax payable under this Regulation, (b) the taxation years to which the order applies, and (c) any terms and conditions relating to the reduction pursuant to this section of tax payable under this Regulation, including (i) the person entitled to the reduction, (ii) the relationship between the costs incurred for conservation or to maintain or increase the recovery of a mineral and the amount of the reduction, and (iii) the information required to be submitted in order to be entitled to the reduction. 6

9 Section 8 FREEHOLD MINERAL RIGHTS TAX REGULATION AR 223/2013 Prescribed date for payment of tax 8 For the purposes of section 2(2) of the Act, the date on or before which the tax must be paid is April 25 in the year following the taxation year. Prescribed date for sending tax statement 9 For the purposes of section 3(1) of the Act, the date on or before which the Minister must send the owner a tax statement is March 25 in the year following the taxation year. Error in tax statement 9.1 If, after receiving a tax statement, an applicant determines that there is an error in the tax statement that may be corrected by the Minister under section 3 of the Act, the applicant may contact the Minister and advise the Minister of the error. AR 167/2015 s3 Notice of objection to tax 10(1) For the purposes of section 4(1) of the Act, the following are prescribed as persons who may object to the amount of tax calculated by the Minister as payable in respect of a taxable mineral right for the taxation year: (a) a recorded lessee in respect of the mineral right; (b) a designated payor in respect of the mineral right; (c) a person who has paid all or part of the tax. (2) For the purposes of section 4(1) of the Act, a notice of objection, in the form established by the Minister, must be served on the Minister on or before (a) in the case of an objection to tax payable shown in a tax statement, other than a new tax statement referred to in section 3(3) of the Act or a corrected tax statement referred to in section 3(4) of the Act, August 15 in the year following the taxation year in respect of which the objection is made, or (b) in the case of an objection to tax payable shown in a new tax statement referred to in section 3(3) of the Act or a corrected tax statement referred to in section 3(4) of the Act, a date 90 days after the date of issue shown on the new or corrected tax statement. 7

10 Section 10.1 FREEHOLD MINERAL RIGHTS TAX REGULATION AR 223/2013 (3) Before an objection may be made all taxes and any interest or penalties for the taxation year in respect of the taxable mineral right must have been paid. AR 167/2015 ss4,5 Review of an objection 10.1(1) The Minister must give notice of the Minister s decision under section 4(2.1) of the Act not later than 180 days after receiving a notice of objection under section 10. (2) The Minister may, if the applicant agrees, extend the period referred to in subsection (1). AR 167/2015 s6 Interest on unpaid tax 11(1) If any tax is not paid when it is due under section 8, interest is payable to the Crown in right of Alberta on the balance of the tax remaining unpaid from time to time until the date on which the entire balance of the unpaid tax is received by the Crown together with any interest on the unpaid tax to that date. (2) If, under section 3(3) or (4) of the Act, the tax payable by an owner for a taxation year is increased or decreased from that shown in the last tax statement issued to the owner in respect of that taxation year, interest is payable, (a) in the case of a decrease, by the Crown on the amount of the decrease to the person who paid the tax from April 25 of the year following the taxation year to the date that the new or corrected tax statement is sent to the owner in which the overpayment and interest are credited, (b) in the case of an increase, by the owner to the Crown on the amount of the increase from April 25 of the year following the taxation year to the date the underpayment and accrued interest are received by the Crown. (3) If interest is payable under this section by or to the Crown in respect of any day, the rate of interest in respect of that day is the yearly rate that is 1% greater than the rate of interest established by Alberta Treasury Branches as its prime lending rate on loans payable in Canadian dollars and in effect on the first day of the month in which that day occurs. (4) Interest computed under subsection (3) must, unless the Minister directs otherwise, be compounded monthly in respect of the period for which it is computed. 8

11 Section 12 FREEHOLD MINERAL RIGHTS TAX REGULATION AR 223/2013 Multiple ownership 12(1) If a person is registered as owner under the Land Titles Act of a specified undivided interest of less than the whole in a taxable mineral right, (a) tax is payable, and (b) any proceedings authorized with respect to the taxable mineral right may be taken with respect to the interest of that person in the taxable mineral right in the same manner as if that person owned the taxable mineral right in the whole of the tract and without regard to any other owner of an interest in the taxable mineral right in the same tract. (2) If more than one person is registered under the Land Titles Act as owner jointly or in common (a) of a taxable mineral right, or (b) of a specified undivided interest of less than the whole in a taxable mineral right, all those persons are regarded as one owner for the purposes of the Act and this Regulation. (3) This section applies to the 2010 and subsequent taxation years. Part 3 Administration and Enforcement Requirement to keep records 13(1) For the purposes of section 7 of the Act, the following persons are required to keep the records referred to in subsection (2): (a) owners of the taxable mineral right; (b) recorded lessees in respect of the taxable mineral right; (c) production entity administrators in respect of the taxable mineral right; (d) designated payors in respect of the taxable mineral right; (e) former owners, recorded lessees, production entity administrators, or designated payors in respect of the taxable mineral right. 9

12 Section 14 FREEHOLD MINERAL RIGHTS TAX REGULATION AR 223/2013 (2) The records required to be kept by a person referred to in subsection (1) are those records that come into the possession of that person or that person s agents and that relate to (a) the quantity of the minerals recovered from the tract for the taxable mineral right concerned, (b) the sale or other disposition of those minerals, or products obtained by processing those minerals, (c) the cost of recovering and processing those minerals and the cost of transportation of those minerals or those products, (d) the payment of royalties to the owner of the taxable mineral right, or (e) the payment of tax under the Act. (3) If the owner of a taxable mineral right has no place of business in Alberta, the owner may keep the records required to be kept by that owner (a) at the owner s residence in Alberta, or (b) at the place of business in Alberta of a person appointed as the owner s agent for the purpose. (4) Records must be kept until the expiration of the 7-year period following the end of the taxation year to which the information contained in the records relates unless, in the case of any particular records, the Minister consents in writing to their destruction before the end of the 7-year period. (5) Notwithstanding subsection (4), if the Minister is of the opinion that it is necessary for the administration of the Act or this Regulation, the Minister may give notice to any person required to keep records directing that those records be retained for any longer period that is specified in the direction. AR 223/2013 s13;167/2015 Penalty for failing to comply with Minister s direction 14(1) If a person contravenes section 8 of the Act by failing to comply with a direction of the Minister to submit a written return within the time stated in the direction, the Minister may assess a penalty against the person under section 8.1 of the Act that must not exceed (a) $ in respect of the first day of the default period, and 10

13 Section 14.1 FREEHOLD MINERAL RIGHTS TAX REGULATION AR 223/2013 (b) $1000 in respect of the 2nd and each subsequent day of the default period. (2) The default period for the purposes of subsection (1) is the period (a) commencing on the day after the expiration of the date specified by the Minister in the direction given pursuant to section 8 of the Act for the written return to be submitted to the Minister, and (b) ending on the day immediately before the day on which the written return is submitted to the Minister. (3) The notice of assessment must specify the return to which the notice relates and may be (a) personally delivered to the person that is to receive it, or (b) sent by registered mail to person that is to receive it at the person s most recent address as shown in the records of the Department. Notice of Objection to penalty for failure to comply with direction 14.1(1) For the purposes of section 8.1(2) of the Act, the date for service on the Minister of a notice of objection is 90 days after the date of issue of the notice of assessment referred to in section 8.1(1). (2) Before an objection may be made under section 8.1(2) of the Act, all penalties assessed against the applicant must have been paid. (3) An objection must contain the following information: (a) a copy of the notice issued under section 8.1(1) of the Act; (b) a summary of the basis for the objection. AR 167/2015 s8 Review of an objection 14.2(1) The Minister must give notice of the Minister s decision under section 8.1(4) of the Act not later than 90 days after receiving a complete notice of objection under section

14 Section 15 FREEHOLD MINERAL RIGHTS TAX REGULATION AR 223/2013 (2) The Minister may, if the applicant agrees, extend the period referred to in subsection (1). AR 167/2015 s8 Confidentiality 15(1) Information or records obtained with respect to a taxable mineral right by the Minister or a person employed or engaged in the administration or enforcement of the Act may be communicated, disclosed or made available in any legal proceedings under the Act with respect to the taxable mineral right or proceedings in respect of offences under the Act. (2) Information or records obtained by the Minister or a person employed or engaged in the administration or enforcement of the Act may be communicated, disclosed or made available to a person employed in or acting on behalf of the Department for the purpose of evaluating, formulating or administering any policy or program of the Department. (3) Subject to subsection (4), a person employed or engaged in the administration of the Act may communicate, disclose or make available information or records in respect of a taxable mineral right to (a) the owner of the taxable mineral right or the owner s successor in title; (b) the production entity administrator in respect of the taxable mineral right; (c) a recorded lessee in respect of the taxable mineral right; (d) a person who pays or is liable to pay all or part of the tax in respect of the taxable mineral right by reason of a contractual obligation to do so; (e) anyone acting on behalf of a person referred to in clause (a) to (d); (f) anyone who has the written consent of a person referred to in clause (a) to (d) to receive or examine the information or records; (g) a person to whom a copy of a default notice is mailed pursuant to section 13(1)(b) of the Act. (4) Information or records may not be communicated, disclosed or made available to a person referred to in subsection (3)(b) to (f) unless 12

15 Section 16 FREEHOLD MINERAL RIGHTS TAX REGULATION AR 223/2013 (a) the Minister is satisfied that the person is entitled to the records or information under subsection (3)(b) to (f), and (b) that person s entitlement to the records or information has neither expired nor been terminated to the knowledge of the Minister. (5) For the purposes of subsection (4)(b), the Minister is not considered to have knowledge of the expiration or termination of a person s entitlement to records or information under subsection (3)(b) to (f) unless (a) evidence furnished to the Minister pursuant to subsection (4)(a) shows the date of expiration of the entitlement, or (b) the Minister receives evidence satisfactory to the Minister of the expiration or termination of the entitlement. Service of documents 16 Unless otherwise provided by the Act or this Regulation, any document required to be given, provided, sent, communicated or served by the Minister under the Act may be (a) personally delivered to the person or company that is to receive it, (b) sent by courier, regular mail or registered mail to person or company that is to receive it at the person s or company s most recent address as shown in the records of the Department, or (c) sent by electronic means through the Electronic Transfer System to the person or company that is to receive it. Part 4 Repeal, Expiry and Coming into Force Repeal 17 The Freehold Mineral Rights Tax Regulation (AR 12/84) is repealed. Expiry 18 For the purpose of ensuring that this Regulation is reviewed, with the option that it may be repassed in its present or an amended form following a review, this Regulation expires on November 30, AR 223/2013 s18;167/2015;171/

16 Schedule A FREEHOLD MINERAL RIGHTS TAX REGULATION AR 223/2013 Schedule A Calculation of Tax on Petroleum Rights Interpretation 1 In this Schedule, (a) taxable quantity in respect of a mineral means the quantity of that mineral that was recovered from a well event in a taxation year and allocated to a petroleum right in respect of that taxation year; (b) a reference to a quantity of a mineral that was recovered from a well event means the quantity of that mineral that was recovered from the well event according to the records of the Alberta Energy Regulator. Categories and densities of crude oil 2(1) The categories of crude oil and the density of each category are as specified in the following Table: Crude Oil Category and Density Table Category of Crude Oil light oil 14 Density less than 900 kilograms per cubic metre heavy oil greater than or equal to 900 kilograms per cubic metre (2) The category for crude oil recovered from a well event during a taxation year is determined by the Minister based on density information available to the Minister. (3) If density information is not available to make a determination under subsection (2), the category for crude oil recovered from a well event during a month is light oil. Calculation of tax payable 3(1) For each taxable quantity of crude oil, solution gas or crude bitumen the Minister shall calculate the following factors in accordance with this Schedule: (a) the light crude oil factor; (b) the heavy crude oil factor; (c) the solution gas factor; (d) the crude bitumen factor. (2) For the purposes of section 4 of the Regulation, the tax payable in respect of a petroleum right for a taxation year is the sum of the factors calculated under subsection (1) for each of the taxable

17 Schedule A FREEHOLD MINERAL RIGHTS TAX REGULATION AR 223/2013 quantities of crude oil, solution gas and crude bitumen that were allocated to the petroleum right in respect of that taxation year. Calculation of light crude oil factor for a taxable quantity 4(1) The light crude oil factor for the light crude oil that was recovered from a well event in a taxation year and allocated to a petroleum right in respect of that taxation year is the amount calculated in accordance with the following equation: LCOF$ = R% x M x UV x (TQ/Q) where LCOF$ is the light crude oil factor, in dollars; R% is the percentage rate of tax prescribed by section 8 of this Schedule for light crude oil for the taxation year; M is the quantity of light crude oil that was recovered from that well event in the taxation year, adjusted in accordance with subsection (2); UV is the unit value for light crude oil for the taxation year established by the Minister under section 3 of the Regulation; TQ is the quantity of light crude oil that was recovered from the well event in the taxation year and allocated to the petroleum right, in cubic metres; Q is the quantity of light crude oil that was recovered from the well event in the taxation year, in cubic metres. (2) For the purposes of subsection (1), M is determined by adjusting the quantity of light crude oil that was recovered from the well event in the taxation year in accordance with the following Table: Adjustment for Quantity Table Quantity of light crude oil recovered from well event in taxation year greater than zero and less than cubic metres equal to or greater than cubic metres Adjustment Formula M = (light crude oil x ) M = (light crude oil 4)

18 Schedule A FREEHOLD MINERAL RIGHTS TAX REGULATION AR 223/2013 Calculation of heavy crude oil factor for a taxable quantity 5(1) The heavy crude oil factor for the heavy crude oil that was recovered from a well event in a taxation year and allocated to a petroleum right in respect of that taxation year is the amount calculated in accordance with the following equation: HCOF$ = R% x M x UV x (TQ /Q) where HCOF$ is the heavy crude oil factor, in dollars; R% is the percentage rate of tax prescribed by section 8 of this Schedule for heavy crude oil for the taxation year; M is the quantity of heavy crude oil that was recovered from that well event in the taxation year, adjusted in accordance with subsection (2); UV is the unit value for heavy crude oil for the taxation year established by the Minister under section 3 of the Regulation; TQ is the quantity of heavy crude oil that was recovered from the well event in the taxation year and allocated to the petroleum right, in cubic metres; Q is the quantity of heavy crude oil that was recovered from the well event in the taxation year, in cubic metres. (2) For the purposes of subsection (1), M is determined by adjusting the quantity of heavy crude oil that was recovered from the well event in the taxation year in accordance with the following Table: Adjustment for Quantity Table Quantity of heavy crude oil recovered from well event in taxation year greater than zero and less than cubic metres equal to or greater than cubic metres Adjustment Formula M = (heavy crude oil x ) M = (heavy crude oil 4)

19 Schedule A FREEHOLD MINERAL RIGHTS TAX REGULATION AR 223/2013 Calculation of solution gas factor for a taxable quantity 6 The solution gas factor for the solution gas that was recovered from a well event in a taxation year and allocated to a petroleum right in respect of that taxation year is the amount calculated in accordance with the following equation: SGF$ = R% x Q x UV x (TQ /Q) where SGF$ is the solution gas factor, in dollars; R% is the percentage rate of tax prescribed by section 8 of this Schedule for solution gas for the taxation year; Q is the quantity of solution gas recovered from the well event in the taxation year, in thousand cubic metres; UV is the unit value for solution gas for the taxation year established by the Minister under section 3 of the Regulation; TQ is the quantity of solution gas that was recovered from the well event in the taxation year and allocated to the petroleum right, in thousand cubic metres. Calculation of crude bitumen factor for a taxable quantity 7(1) The crude bitumen factor for the crude bitumen that was recovered from a well event in a taxation year and allocated to a petroleum right in respect of that taxation year is the amount calculated in accordance with the following equation: CBF$ = R% x M x UV x (TQ /Q) where CBF$ is the crude bitumen factor, in dollars; R% is the percentage rate of tax prescribed by section 8 of this Schedule for crude bitumen for the taxation year; M is the quantity of crude bitumen that was recovered from that well event in the taxation year, adjusted in accordance with subsection (2); UV is the unit value for crude bitumen for the taxation year established by the Minister under section 3 of the Regulation; TQ is the quantity of crude bitumen that was recovered from the well event in the taxation year and allocated to the petroleum right, in cubic metres; Q is the quantity of crude bitumen that was recovered from the well event in the taxation year, in cubic metres. 17

20 Schedule B FREEHOLD MINERAL RIGHTS TAX REGULATION AR 223/2013 (2) For the purposes of subsection (1), M is determined by adjusting the quantity of crude bitumen that was recovered from the well event in the taxation year in accordance with the following Table: Adjustment for Quantity Table Quantity of crude bitumen recovered from well event in taxation year greater than zero and less than cubic metres equal to or greater than cubic metres Adjustment Formula M = (crude bitumen x ) M = (crude bitumen 4) Rate of tax 8(1) For the purposes of section 4 of this Schedule, the rate of tax in respect of light crude oil is 26.9 %. (2) For the purposes of section 5 of this Schedule, the rate of tax in respect of heavy crude oil is 26.9 %. (3) For the purposes of section 6 of this Schedule the rate of tax in respect of solution gas is 6.9 %. (4) For the purposes of section 7 of this Schedule, the rate of tax in respect of crude bitumen is 26.9%. Schedule B Calculation of Tax on Natural Gas Rights Interpretation 1 In this Schedule, (a) taxable quantity in respect of a mineral means the quantity of that mineral that was recovered from a well event in a taxation year and allocated to a natural gas right in respect of that taxation year; (b) a reference to a quantity of a mineral that was recovered from a well event means the quantity of that mineral that was recovered from the well event according to the records of the Alberta Energy Regulator. 18

21 Schedule B FREEHOLD MINERAL RIGHTS TAX REGULATION AR 223/2013 Calculation of tax payable 2(1) For each taxable quantity of raw gas or condensate the Minister shall calculate the following factors in accordance with this Schedule: (a) the gas factor; (b) the condensate factor. (2) For the purposes of section 4 of the Regulation the tax payable in respect of a natural gas right for a taxation year is the sum of the factors calculated under subsection (1) for each of the taxable quantities of raw gas and condensate that were allocated to the natural gas right in respect of that taxation year. Calculation of gas factor for a taxable quantity 3(1) The gas factor for the raw gas that was recovered from a well event in a taxation year and allocated to a natural gas right in respect of that taxation year is the amount calculated in accordance with the following equation: FGF$ = [R% - r Q %] x Q x UV x (TQ /Q) where FGF$ is the gas factor, in dollars; R% is the percentage rate of tax prescribed by section 5 of this Schedule for raw gas for the taxation year; r Q % is the rate for quantity, determined in accordance with subsection (2); Q is the quantity of raw gas that was recovered from that well event in the taxation year, in thousand cubic metres; UV is the unit value for raw gas for the taxation year established by the Minister under section 3 of the Regulation; TQ is the quantity of raw gas that was recovered from the well event in the taxation year and allocated to the natural gas right, in thousand cubic metres. (2) For the purposes of subsection (1), r Q % is calculated in accordance with the formula in the following Table, where R% is the percentage rate of tax prescribed by section 5 of this Schedule for raw gas for the taxation year; ADP is the average daily production of raw gas for the well event: 19

22 Schedule B FREEHOLD MINERAL RIGHTS TAX REGULATION AR 223/2013 Rate for Quantity Table Quantity ADP less than 16.9 thousand cubic metres per day ADP equal to or greater than 16.9 thousand cubic metres per day Formula r Q % = [(R% - 1%) x (16.9 ADP) 2 ] (16.9) 2 r Q % = 0 Calculation of condensate factor for a taxable quantity 4(1) The condensate factor for the condensate that was recovered from a well event in a taxation year and allocated to a natural gas right in respect of that taxation year is the amount calculated in accordance with the following equation: FCF$ = R% x M x UV x (TQ /Q) where FCF$ is the condensate factor, in dollars; R% is the percentage rate of tax prescribed by section 5 of this Schedule for condensate for the taxation year; M is the quantity of condensate that was recovered from that well event in the taxation year, adjusted in accordance with subsection (2); UV is the unit value for condensate for the taxation year established by the Minister under section 3 of the Regulation; TQ is the quantity of condensate that was recovered from the well event in the taxation year and allocated to the natural gas right, in cubic metres; Q is the quantity of condensate that was recovered from the well event in the taxation year, in cubic metres. (2) For the purposes of subsection (1), M is determined by adjusting the quantity of condensate that was recovered from the well event in the taxation year in accordance with the following Table: 20

23 Schedule B FREEHOLD MINERAL RIGHTS TAX REGULATION AR 223/2013 Adjustment for Quantity Table Quantity of condensate recovered from well event in taxation year greater than zero and less than cubic metres equal to or greater than cubic metres Adjustment Formula M = (condensate x ) M = (condensate 4) Rate of tax 5(1) For the purposes of section 3 of this Schedule, the rate of tax in respect of raw gas is 6.9 %. (2) For the purposes of section 4 of this Schedule, the rate of tax in respect of condensate is 26.9 %. 21

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