Information for Wood Producers pertaining to Gasoline and Motive Fuel Tax Exemptions

Transcription

1 Information for Wood Producers pertaining to Gasoline and Motive Fuel Tax Exemptions Fuel Tax Guide Province of New Brunswick Department of Finance Revenue and Taxation Division FTG: 202 October 2013 Gasoline and Motive Fuel Tax Act This guide is intended to provide information respecting eligibility for motive fuel tax exemptions available to Wood Producers under the Gasoline and Motive Fuel Tax Act, (the Act). This guide should not be regarded or relied upon as a legal interpretation of the Act. In all cases, legislation should be consulted to determine eligibility criteria and exemption provisions. Table of Contents Sections I. Exemptions for a Wood Producer II. Eligibility Criteria III. Purchaser s Permit IV. Purchasing Tax Exempt Motive Fuel V. Motive Fuel Marked as Tax Exempt VI. Record Keeping Requirements VII. Annual Reporting VIII. Gasoline and Motive Fuel Tax Refunds IX. Audit and Inspections X. Objections and Appeals XI. Definitions XII. Contact Information Section I - Exemptions for a Wood Producer The Act specifies that a person who is determined by the Minister under the Act to be a Wood Producer will qualify for an exemption where the gasoline and/or motive fuel is purchased for use solely in the operation of: i) a tractor, other than a truck tractor, and any other machinery for the purpose of harvesting trees in a logging operation conducted in a forest area; or Truck Tractor - refers to the power unit of a tractor trailer combination; Harvesting Trees - includes cutting, hauling from the stump to the skidway, delimbing and slashing; Forest Area - refers only to the immediate cutting area where trees are harvested. This also includes any staging areas located in the immediate area where wood products may be stockpiled and maintained prior to being transported on registered motor vehicles. an unregistered motor vehicle while transporting wood products and while being operated on property other than a public highway. Important Notes: 1. The exemption for transporting wood products includes the transportation of wood with unregistered motor vehicles on private roads and the loading/unloading of wood products on/off transportation equipment when: 1) the loading/unloading takes place in the forest area; and 2) the loaders operate independent of the fuel system of a registered motor vehicle. 2. The exemption for wood producing ceases at the point where wood products are first loaded onto registered motor vehicles. Qualifying equipment generally includes (but is not limited to) the following: unregistered motor vehicles; unregistered machinery used for constructing, maintaining and snowplowing woods roads and access roads within the confines of the forest operation; tractors; all-terrain vehicles; snowmobiles; brush saws; This publication is prepared for information purposes only and is not binding on the Province of New Brunswick with respect to the application of tax due and owing to the Province of New Brunswick under the Gasoline and Motive Fuel Tax Act and Regulations. The application of tax to a particular situation is governed by the Act and Regulations and if there is a conflict between the provisions of this Fuel Tax Guide and the Act and Regulations, the Act and Regulations shall prevail.

2 chain saws; dozers; feller-bunchers; fork lifts; harvesters; porters; skidders; slashers; timber-jacks; scarification equipment (used to break up and loosen the surface of the ground); loaders. Snow Removal: This activity qualifies for exemption provided that: it is restricted to the forest work operations; is performed in order to facilitate the forest work operations; and is performed using equipment that qualifies for exemption under the forest worker provision. Snow removal in areas such as opening residential and non-residential driveways and parking lots is subject to the gasoline and motive fuel tax. In order to receive the motive fuel exemption the qualifying person can either obtain the exemption at the point-of-purchase, or apply for a refund of taxes paid. In order to receive the gasoline exemption, the qualifying person must apply for a refund of taxes paid. The Act does not permit gasoline to be obtained exempt of tax at point-of-purchase. It is important to note that these consumers must maintain proper records as specified below in Section VI in order to substantiate claims. Section II - Eligibility Criteria To be eligible for a purchaser s permit as a Wood Producer, an applicant is required to operate a commercial wood harvesting operation involving: i) the felling of trees, or the removal of trees from stump to a skidway, log dump or carrier. An applicant involved in one or more of the above activities must meet at least one of the following criteria: i) harvested or cut an average of at least 300 cords of wood or the equivalent of at least 300 cords of wood in either of the two fiscal years preceding the date of application; or derived from the operation an annual gross income of at least $5,000 in either of the two fiscal years preceding the application; or i in the case of a start-up operation, the applicant must have invested at least $10,000 in wood harvesting equipment. Section III Purchaser s Permit Application Persons who wish to obtain a Wood Producer s purchaser s permit, must apply to the Department of Finance on a form provided by the Minister, providing all information and documentation specified on the application form. Applications must also include payment of a fee of $ Any application that does not include the fee will not be processed. Wood Producers must sign a declaration (incorporated into the application) of income from wood harvesting operations. However, the amount declared must meet the regulatory requirements and the applicant must maintain financial statements or copies of income tax returns to substantiate the income amount declared. In the case of a start-up operation, the investment in equipment must be supported with either the original sales receipt obtained at the time of purchase ($10,000 in wood harvesting equipment) or a copy of a completed balance sheet prepared by a registered accountant must be submitted with the application. In the event that an application is rejected, the applicant will be notified in writing. Conditions Purchaser s permit s for Wood Producers do not entitle the permit holder to purchase all fuel tax exempt. The permit only entitles either the person named, an employee, or his/her agent to purchase tax exempt fuel that is prescribed by the Act. Gasoline and motive fuel consumed by Wood Producers outside of the specific areas prescribed by the Act do not qualify for exemption. The permit is not to be used by any other person and is not transferable. Permits cannot be used to purchase tax exempt fuel after the expiry date or prior to the date of issue shown on the. It is the responsibility of the permit holder to advise the Department of Finance of any changes such as the name or address of the business. If a permit is lost or destroyed, the permit holder is required to advise the Department in writing advising of the circumstances and to request a replacement permit. Page 2

3 Renewals It is the responsibility of the permit holder to renew the purchaser s permit on a form provided by the Minister before the expiry date of the permit. All renewal applications must be completed in their entirety in order to be processed. The department will verify eligibility using the same criteria that is applied upon making a first time application. A fee of $12.50 must also accompany all applications for renewal. The department will provide the applicant with a written notice indicating whether the application has been approved or rejected. Where the application is approved, the permit will indicate the effective renewal date. Qualifying Wood Producers will have their permits renewed for one (1) year. The renewal of a permit will be dated consecutively with the expiry date of the former permit, provided that the application for renewal is received no later than thirty (30) days after the expiry date of the permit. Applications received beyond the thirty-day timeframe will be effective from the issue date. It is recommended that the renewal application be filed within the thirty days to avoid breaks in active status. Revocation and Reinstatement A Wood Producer s purchaser s permit may be revoked if the Minister has reasonable and probable grounds to believe that the permit holder has either violated or has failed to comply with the Act or Regulations in a manner related to any of the following: i) the information provided on or with the application for the issuance or the renewal of a permit is inaccurate, misleading or false; or the permit holder is not or is no longer engaged in the activity for which the permit was issued or renewed and does not meet the criteria for a Wood Producer; or i the permit holder defaulted on payment of monies payable under the Act or the Real Property Tax Act; or iv) the permit holder is in breach of an undertaking or agreement given or made to the Minister; or v) the permit holder refuses to allow a peace officer, an inspector or any other person with the written authority of the Minister to remove motive fuel samples. The Minister shall serve a person whose purchaser s permit is revoked a written notice explaining the reasons for revocation. The period of revocation shall be not less than six (6) months and not more than three (3) years. A person whose permit is revoked is to surrender his/her permit to the Minister immediately upon being served the notice of revocation. That person may then apply to the Minister for reinstatement by requesting reinstatement in writing and submitting an application for renewal. A permit which has been revoked may be reinstated by the Minister where: i) the Minister is satisfied that the corrected information on the application entitles the applicant to a permit; or the Wood Producer whose permit has been revoked gives a written undertaking acceptable to the Minister to pay the tax on the fuel purchased without payment of tax; or i a satisfactory agreement is made with the Minister to pay the monies payable under the Act or the Real Property Tax Act. Before a permit is reinstated, the Minister or his designate may require an audit of the person seeking reinstatement. Reinstated permits are effective for one (1) year and expire on the first anniversary on which reinstatement became effective. No purchaser s permit will be reinstated until the revocation period has expired, if applicable. The Minister will notify all applicants as to whether or not the permit is reinstated, and where applicable, the effective date of reinstatement. Cancellation Cancellation of a purchaser s permit is voluntary and occurs when the permit holder is no longer engaged in wood producing activities and does not otherwise qualify for a permit. This may be the result of discontinued operations or the sale of the business entity. Cancellation must be done in writing. Upon cancellation, the permit must be surrendered to the Department of Finance immediately. Section IV - Purchasing Tax Exempt Motive Fuel Gasoline and motive fuel retailers and wholesalers are required to obtain proof of a valid purchaser s permit before dispensing tax exempt product. Failure to provide a valid purchaser s permit at Page 3

4 time of purchase will result in the payment of all applicable tax. Section V- Motive Fuel Marked as Tax Exempt All tax exempt diesel fuel, stove oil and furnace oil sold in New Brunswick or sold outside New Brunswick for consumption in this Province is marked with a red dye so as to make it distinguishable from taxable clear diesel. It is recommended that extreme care be taken when refueling from bulk storage. Wood Producers must ensure that marked tax exempt motive fuel is not placed in vehicles or equipment that do not qualify for the exemption. The Act does not permit the storage of tax paid and tax exempt (marked) fuel in the same storage tank. Section VI - Record Keeping Requirements The Act requires that consumers of tax exempt motive fuel maintain records to substantiate the following: i) Date of each purchase or acquisition of fuel relating to your operation as a Wood Producer; Name and address of the person from whom the fuel was acquired; i Number of gallons or litres of fuel purchased or acquired; iv) Type of fuel purchased or acquired; v) Vehicle or equipment into which fuel was placed; vi) Tasks performed by that vehicle or equipment; and v Number of hours of service dedicated to each task where the vehicle is or equipment is used for both taxable and exempt tasks. Wood Producers must provide these records upon request for the purposes of allowing either an audit or an inspection. Failure to maintain or provide records may result in fines or revocation of the purchaser s permit. All validly registered Wood Producers must maintain records for a period of six (6) years. Written permission must be obtained from the Revenue and Taxation Division before any documents may be destroyed. Section VII Annual Reporting Fuel purchase information and equipment details will now be included in the Purchaser s Permit Application form and will be submitted along with the request for the Purchaser s Permit renewal. The fuel purchase information and equipment details are to be completed using the records outlined above and will serve to substantiate the consumption associated with all gasoline and motive fuel purchased within each reporting period. Section VIII Refunds In order to qualify for a refund of gasoline and/or motive fuel tax, a Wood Producer must purchase gasoline, clear diesel or other motive fuel and pay the applicable tax. The Wood Producer may then apply to the Department of Finance for a refund of the tax paid on fuel consumed in qualified equipment performing qualified activities as prescribed by legislation. The Wood Producer shall complete a refund application form in its entirety and submit the form to the Department of Finance along with clear photocopies of purchase receipts to substantiate all purchases of tax paid gasoline and/or diesel. Claimants must be able to substantiate their claim with proper records, indicating the disbursement records outlined in Section VI. Disbursements refer to the total consumption during a claim period of both taxed and tax exempt product. Fuel tax refund applications will be processed in a timely manner providing: i) all requested information is supplied and verifiable; supplemental documents and invoices are included; and i no discrepancies in taxable and/or tax exempt amounts occur. The claimant will be notified in writing as to whether the application has been approved or rejected and, where applicable, the amount of gasoline and motive fuel tax refunded. All claims are limited to a period of three (3) years from the day on which the overpayment of tax was made and may be subject to an audit. Section IX Audit and Inspections The Act authorizes peace officers, inspectors, auditors or any person with specific or general Page 4

5 written authority from the Minister to have records made available to them upon request at any reasonable time for the purposes of making any inquiries, examinations or seizures as are deemed necessary. From time to time, your records will be reviewed to ensure compliance with regulations. Failure to maintain records as explained above may result in fines being levied or loss of the privilege to purchase tax exempt fuel. Inspectors and designated agents are also authorized to procure fuel samples from machinery, vehicles, and equipment and external storage units to verify the presence of tax exempt fuel, which is marked with a coloring agent. Department of Finance Auditors and Inspectors are available for assistance with matters regarding record keeping and record maintenance or general inquiries regarding the motive fuel tax exemption program. Penalties Any violation of the Act as either revealed by an audit or an inspection is subject to fines and/or penalties. It could also result in the loss of the privilege to purchase tax exempt motive fuel. For example, the minimum fine for consuming tax exempt fuel in a motor vehicle not exempted under subsection 6(6) of the Act is $1, Section X Objections and Appeals Applicants wishing to dispute tax amounts may file a Notice of Objection with the Provincial Tax Commissioner setting out the reasons for the objection and all relevant facts. The notice must be filed within 30 days after paying the tax or the date of the service or mailing of a Notice of Assessment, whichever is sooner. Upon receipt of a Notice of Objection, the Commissioner shall within 60 days reconsider the assessment and vacate, confirm or vary the assessment or reassess, and the Commissioner shall thereupon notify the applicant of the action. Within 30 days after being notified of such decision, taxpayers who are dissatisfied with the decision of the Commissioner may file a Notice of Appeal with the Minister of Finance. The Minister shall within 30 days after the receipt of Notice of Appeal, fix a date to consider the appeal and shall give a notice of such hearing to the appellant and the Commissioner. Upon any such appeal, the Minister may affirm, vary or reverse the decision of the Commissioner and shall give a written notice of the decision to the appellant by personal service or by ordinary or registered mail. Appellants who are dissatisfied with the decision of the Minister may, within 30 days after the date of service or mailing of the notice explaining the Minister s decision, appeal from such decision to a judge of the Court of Queen s Bench of New Brunswick. Section XI Definitions Audit means the examination of books and records and other documentation supporting the applicant s nature of business to ascertain the proper quantity of tax exempt fuel consumption and taxable fuel consumption for assessment and/or refund purposes. Cancellation means the voluntary termination of one s exemption status. Commissioner means the Provincial Tax Commissioner provided for under the Revenue Administration Act and includes those persons designated by the Minister of Finance to act on behalf of the Provincial Tax Commissioner. Disbursement Records refer to the total consumption during a claim period. The Gasoline and Motive Fuel Tax Act requires that disbursements be supported by legitimate documentation. Disbursements may include withdrawals from bulk storage and/or direct deliveries from suppliers to vehicles, equipment and machines. Gasoline means any petroleum product containing any product of petroleum, natural gas or coal having a specific gravity of or under at 60 degrees Fahrenheit (15.6 degrees Celsius); including benzol and any benzol mixture, but not including manufactured gas, natural gas, bunker fuel, crude oil or propane. Minister means the Minister of Finance and includes the Commissioner and those persons designated by the Minister of Finance to act on behalf of the Minister or on behalf of the Commissioner. Motive Fuel means any gas fuel or liquid fuel that is not gasoline and that can be used for moving or operating any internal combustion engine or for heating, such as: kerosene, propane, natural gas, crude oil, furnace oil, stove oil, diesel, distillate and other motor oil. Page 5

6 Motor Vehicle is defined under the Gasoline and Motive Fuel Tax Act as every vehicle that is (a) self propelled, or (b) propelled by electric power from overhead trolley wires, and not operated upon rails but does not include a farm tractor. Peace Officer means a member of the Royal Canadian Mounted Police and, in relation to the administration, collection and enforcement of taxes payable under the Gasoline and Motive Fuel Tax Act, includes an appointed officer. Revocation means the action of having a licence or a right rescinded, retracted, repealed and/or invalidated. XII - Contact Information All inquiries regarding the application of the gasoline and motive fuel tax or the exemptions provided to qualifying Wood Producers should be directed to: Department of Finance Revenue & Taxation Division Marysville Place, P.O. Box 3000 Fredericton, NB E3B 5H1 Telephone: (800) Fax: (506) wwwfin@gnb.ca Web site: Page 6