The Oil and Gas Production Tax Act

The Oil and Gas Production Tax Act, C.C.S.M. c. O37 (Assented to November 19, 1996) bilingual version (HTML) Table of Contents Section 1 Definitions 2 Imposition of tax on oil and gas 3 Holder liable for tax 4 Operator to pay tax 5 Designation of special operator 6 Deductions from tax 7 Operator to keep records 8 Tax payment to include a return 9 Director may demand information 10 Registrar may conduct audit 11 Confidentiality of information 12 Application of Oil and Gas Act 13 Director's notice of non-compliance 14 Appeal of tax or penalty 15 Penalties 16 Offences 17 Service of documents 18 Director's certificate as evidence 19 Regulations 20 Transitional: appeals 21 Amendments to The Oil and Gas Act 22 Repeal 23 C.C.S.M. reference 24 Coming into force HER MAJESTY, by and with the advice and consent of the Legislative Assembly of Manitoba, enacts as follows: Definitions 1(1) In this Act, "freehold oil and gas rights" means, in respect of a parcel of land, the rights to search for and produce oil and gas found in or under the land, but does not include such rights held (a) by the Crown, (b) by His Majesty in right of Canada, or (c) in respect of land within a reserve, as defined in the Indian Act (Canada); (« droits pétroliers et gaziers ») "minister" means the member of the Executive Council charged by the Lieutenant Governor in Council with the administration of this Act; (« ministre ») "operator" means (a) in respect of a spacing unit that is not within a unit area, the holder of a well licence issued under Part 8 of The Oil and Gas Act for a well in the spacing unit, and (b) in respect of a spacing unit that is within a unit area, the unit operator appointed under the unit agreement or unit order; (« exploitant ») "special operator" means a person designated as a special operator under subsection 5(1); (« exploitant spécial ») "tax" means the tax imposed under subsection 2(1), and for the purpose of collection includes any penalty or interest payable under this Act; (« taxe ») "taxpayer" means a person who is liable to pay tax; (« contribuable ») "working interest" means an interest in a spacing unit or any oil or gas produced from or allocated to the spacing unit, and includes the share of a royalty owner, as defined in The Oil and Gas Act , in any proceeds from the sale of the oil or gas. (« intérêt économique direct ») Application of definitions in Oil and Gas Act 1(2) In this Act, each of the following terms has the meaning given to it in subsection 1(1) of The Oil and Gas Act : "Crown" , "director" , "gas" , "oil" , "person" , "registrar" , "spacing unit" , "well" . Imposition of tax on oil and gas 2(1) A tax calculated in accordance with the regulations shall be paid, in accordance with this Act and the regulations, on all oil and gas produced in the province from freehold oil and gas rights. LG in C may waive or reduce tax 2(2) Notwithstanding subsection (1), the Lieutenant Governor in Council may by order waive or reduce tax that is otherwise payable in respect of oil or gas produced from or allocated to a well or spacing unit, or a group of wells or spacing units. Holder of working interest liable for tax 3 A person who holds a working interest in a spacing unit is liable for the proportion of the tax payable on any oil or gas produced from or allocated to the spacing unit that his or her interest is of all the working interests in the spacing unit, and the liability continues until the tax is paid to the Crown. Operator to pay tax 4 The operator of a spacing unit from which oil or gas is produced or to which oil or gas is allocated shall pay the tax on behalf of the holders of working interests in the spacing unit, other than any holder designated as a special operator in respect of the spacing unit. Designation of holder as special operator 5(1) Where the holder of a working interest in a spacing unit wishes to dispose of his or her share of oil or gas produced from or allocated to the spacing unit separately from the operator, the director may, on written application by the holder in accordance with the regulations, designate the holder as a special operator in respect of the spacing unit for the purpose of this Act. Director may require security 5(2) The director may, in making a designation, impose any term or condition the director considers appropriate, including the posting of a bond or other security to ensure that tax is paid by the applicant in accordance with this Act and the regulations. Special operator to pay tax 5(3) A special operator shall pay the tax on his or her interest in the oil or gas produced from or allocated to the spacing unit in accordance with this Act and the regulations. Applicant to provide address for service 5(4) A person who applies under subsection (1) shall provide his or her address, and where the person is not a resident of Manitoba, the name and address of an agent who is a resident of Manitoba, for the purpose of serving documents on the person under this Act. Operator to provide information 5(5) The operator of a spacing unit shall provide any person designated as a special operator in respect of the spacing unit with the information required by the person to calculate the tax. Deductions from tax 6 Subject to the regulations, no credit or other deduction may be made in calculating or paying the tax. Operator to keep records 7(1) An operator shall keep and maintain records and books of account in respect of any oil or gas produced from or allocated to the spacing unit and in respect of any payment of tax on the oil and gas for not less than six years following the end of the year to which the information contained in them relates. Standards 7(2) The operator shall keep and maintain the records and books in accordance with accounting principles and standards that are generally accepted in the petroleum industry. Extension of time period 7(3) Notwithstanding subsection (2), if the director is of the opinion that it is necessary for the administration of this Act, the director may by order served on a person required to keep records, require the person to retain the records for a longer period specified in the order. S.M. 2024, c. 35, s. 36 . Tax payment to include a return 8(1) Every person who makes a tax payment shall file with the payment a return in a form acceptable to the registrar. Penalty for failure to file return 8(2) An operator or special operator that fails to file a return or a complete return with the tax payment within the time allowed for the tax payment is liable to a penalty, to be imposed by the director, not exceeding $50. for each day during which the failure continues. Director may demand information 9(1) The director may, for a purpose relating to the administration or enforcement of this Act, by demand served on the holder of a working interest, require the holder to provide information, including a record or other document in the possession or control of the holder, and the holder shall provide the information to the director within 10 days after the demand is served. Penalty for failure to provide information 9(2) A person who fails to comply with a demand for information is liable to a penalty, to be imposed by the director, not exceeding $50. for each day during which the failure continues. Registrar may conduct audit 10(1) The registrar may, with the written approval of the director, at any reasonable time and without a warrant, enter upon any business premises of an operator or special operator or any premises where the registrar has reasonable grounds to believe that business records of an operator or special operator are kept and (a) audit the records and books of account of the operator or special operator to determine or verify information that is required to be filed or provided under this Act; or (b) after giving a receipt for the records and books, remove them from the premises for the purpose of making copies. Records and books kept outside the province 10(2) An operator or special operator that keeps any records or books of account outside the province shall make an arrangement satisfactory to the registrar to make the records and books available for an audit. Confidentiality of information 11 Sections 20 and 21 and subsection 198(1) (confidential information) of The Oil and Gas Act and any regulation made under clause 217(1)⁠(tt) of that Act apply with necessary modification to information acquired under this Act by a person in the course of carrying out a duty or power under this Act. Application of Oil and Gas Act to collection 12 The tax is a charge for the purpose of subsection 192(1) (charges are recoverable as debt to Crown) of The Oil and Gas Act , and Part 17 (collection) and section 206 (remedies for enforcement) of that Act apply with necessary modification. Director may serve notice of non-compliance 13(1) Where the director has reasonable grounds to believe that an operator or special operator is not in compliance with this Act in respect of a spacing unit, the director may serve notice of the non-compliance on the person who is not in compliance and each holder of a working interest in the spacing unit and may in the notice require that the non-compliance be remedied within a period of time specified in the notice. Shut down notice and application of Part 15 of Oil and Gas Act 13(2) If the person fails to remedy the non-compliance within the time specified in the notice, the director may serve a shut down notice on the person in accordance with section 176 of The Oil and Gas Act , and the following provisions of Part 15 (enforcement) of that Act apply with necessary modification: sections 176, 178 and 179, subsection 181(2) and sections 182 to 185 (seizure). Appeal of tax or penalty to minister 14(1) An operator or special operator that pays tax, a taxpayer on whose behalf an operator pays tax, or a person on whom a penalty is imposed under subsection 8(2) (failure to file return) or 9(2) (failure to provide information) may, within 30 days after paying the tax or penalty, appeal to the minister the amount of tax or the imposition of the penalty. Minister may refer matter to board 14(2) The minister may, before deciding the appeal, refer the matter to the Oil and Gas Conservation Board in accordance with subsection 8(1) of The Oil and Gas Act , and if the minister directs the board to hold a hearing in respect of the matter, sections 25 to 32 of that Act apply with necessary modification. Appeal to King's Bench 14(3) Where the minister decides an appeal without referring the matter to the board, the decision may be appealed to the Court of King's Bench on a question of law or jurisdiction. Penalties under this Act 15 Except as otherwise expressly provided in this Act or the regulations, a penalty provided for in this Act may be imposed notwithstanding that some other penalty may be imposed in the same or similar circumstances. Offences 16(1) A person is guilty of an offence who (a) refuses or wilfully neglects to provide information under subsection 9(1), or provides false or misleading information; (b) refuses or wilfully neglects to file a return or a complete return under subsection 8(1), or files a false or misleading return; (c) fails to keep or maintain records or books of account or accurate records or books of account, or makes, participates in, assents to or acquiesces in the keeping of, false or misleading entries or omissions in records or books of account; (d) fails to make records or books of account available for inspection; (e) obstructs or hinders, or attempts to obstruct or hinder, the director or registrar in carrying out a power or duty under this Act; (f) fails to comply with an order made by the director under this Act; or (g) contravenes or fails to comply with a provision of this Act or the regulations. Penalties 16(2) A person who is guilty of an offence under subsection (1) is liable, on summary conviction, (a) if an individual, to a fine of not more than $1,000; and (b) if a corporation, to a fine of not more than $10,000. Evasion 16(3) A person who wilfully evades or attempts to evade payment of tax is guilty of an offence and is liable on summary conviction to a fine of not less than 25% and not more than 200% of the amount of tax sought to be evaded. Corporate officers and directors 16(4) Where a corporation commits an offence under this Act, an officer, director, employee or agent of the corporation who directs, authorizes, assents to, acquiesces in or participates in the commission of the offence is a party to and guilty of the offence and is liable to the penalty provided for the offence, whether or not the corporation is prosecuted or convicted. Service of documents 17 Section 209 (service of notices and other documents) of The Oil and Gas Act applies with necessary modification in respect of the service of a document under this Act. Director's certificate admissible in evidence 18 In a prosecution or other action or proceeding under this Act, a certificate purporting to be signed by the director certifying as to any matter of record in the director's office is admissible in evidence without proof of the director's appointment, authority or signature. Regulations 19(1) The Lieutenant Governor in Council may make regulations respecting (a) the calculation of tax payable, including a method or methods for calculating tax and any allowable deductions; (b) the manner of payment of tax; (c) the designation of persons as special operators, including the information to be provided by applicants, the imposition of terms and conditions and the cancellation of designations; (d) records and books of account to be kept by any person under this Act; (e) the filing of returns; (f) the application of a tax payment to any tax arrears or interest or penalties owing in respect of tax; (g) the imposition of interest and penalties; (h) any other matter the Lieutenant Governor in Council considers necessary or advisable to carry out the objects and purposes of this Act. Establishment of classes of oil and gas for tax calculation 19(2) The Lieutenant Governor in Council may in a regulation made under clause (1)⁠(a) (a) establish classes of oil and gas based on criteria the Lieutenant Governor in Council considers appropriate, which may include methods of production and the dates on which wells come into production; and (b) set different rates of tax for the different classes. Transitional: appeals 20 Section 14 (appeals) applies in respect of a tax or penalty paid after this Act comes into force. 21 NOTE: This section contained amendments to The Oil and Gas Act , which are now included in that Act. Repeal 22 The Oil and Gas Production Tax Act , S.M. 1987-88, c. 51, is repealed. C.C.S.M. reference 23 This Act may be cited as The Oil and Gas Production Tax Act and referred to as chapter O37 of the Continuing Consolidation of the Statutes of Manitoba . Coming into force 24 This Act comes into force on a day fixed by proclamation. NOTE: S.M. 1996, c. 27 was proclaimed in force April 1, 1997.