By Sheldon Spackman

Tax Relief

Red Deer County providing tax relief for shallow gas producers

Oct 16, 2019 | 8:54 AM

Red Deer County Council is complying with a request from the Alberta government to provide property tax relief for shallow gas producers this year.

The request from Alberta Municipal Affairs calls on municipalities to reduce 2019 property taxes on shallow gas wells and related pipelines by 35 per cent and cancel any related late payment penalties.

Municipal Affairs Minister Kaycee Madu said in a Sept. 17 letter that many shallow gas producers are in a difficult financial situation, with some becoming insolvent due to prevailing global market conditions and high operating expenses, including property taxes.

“Municipal Affairs is conducting a review of regulated assessment models, including assessment of wells and pipelines,” said Madu. “The current assessment models have not been updated since 2005, and do not reflect the circumstances faced by many shallow gas producers with older, lower productivity assets. Preliminary indications are that the review will result in lower assessments for older shallow gas assets, but cannot be implemented until the 2020 taxation year.”

County officials note qualifying properties have already been identified by the province, with affected municipalities to be reimbursed this year through education property tax credits equivalent to the refunded amounts.

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That means $987,270.19 in property tax credits to be distributed to local shallow gas producers. Current outstanding tax receivables for the County have been pegged at $4.9 million, with many of those companies said to be on Municipal Affair’s list.

County officials interpret the request as a good indicator that tax revenue changes are on the way for Alberta municipalities in 2020 and beyond.

On Thursday, Lacombe County council approved the cancellation of a total of $559,659 in 2019 property taxes for shallow gas producers this year and $557.53 in current year’s penalties for thirty-one linear properties.