By Sheldon Spackman

Sign Of The Times

Red Deer County writes off $1.8 million in bad debt

Dec 17, 2020 | 9:00 AM

Red Deer County council has approved a recommendation to write off over $1.8 million in bad debt expenses due to uncollectable property taxes from oil and gas properties in 2020.

County officials say these debts represent the municipal portion of unpaid property tax that’s required to apply for the Provincial Education Requisition Credit (PERC) and the Designated Industrial Requisition Credit (DIRC) from Municipal Affairs.

It’s noted that the Alberta government is supporting municipalities by providing a tax credit for uncollectable education property taxes on oil and gas properties.

As a result, administration has calculated that Red Deer County is eligible for $288,878.43 from the Alberta School Foundation Fund.

In addition, all municipalities in Alberta that have properties subject to the Designated Industrial Property Tax Requisition are eligible to request a cancellation or refund (DIRC). It’s noted these are the same properties as the PERC program.

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According to county officials, the uncollectible levy associated with those properties totals $8,537.34, with the total for the two credits being $297,415.77.

Municipalities, however, must write off the municipal property tax portion for oil and gas facilities to be eligible to apply for both programs.

The outstanding tax amounts have been reviewed by the county’s lawyer who admits there is a high probability that payment will not be received.

Despite provincial incentives though, Mayor Jim Wood feels it’s still important for the county to continue its efforts in trying to find ways for oil and gas companies to pay their property taxes.

“I think the province has in fact made some changes to corporate tax rates which will definitely start to benefit our oil companies,” Wood said during Tuesday’s council meeting. “And the other thing that I’ve noticed most lately is that the oil prices seem to be continuing to climb, and I think as we start to see some of those things, the financial situation of some of our oil companies hopefully, will start to improve.”

“I know that they’ve all done the best job that they can to try to shave off their costs through this time,” added Wood. “But the negative that we have right now is trying to work with COVID and everyone is dealing with that. We’ve always wanted to work with this industry and it’s a shame to have to write-off taxes, but at least we are getting that requisition back.”