BARRHEAD-County of Barrhead councillors were forced to write-off more than $450,000 in property taxes and penalties from three oil and gas companies after they went into receivership.
If they had not written off the debt, the municipality would have been on the hook for even more.
That is what director of finance Tamara Molzahn told councillors during their Oct. 20 meeting.
The reason for this she noted is that if they did not take the accounts off their books, the municipality could not apply to receive provincial credits under the Provincial Education Requisition Credit (PERC) or the Designated Industrial Requisition Credit (DIRC).
Under the Municipal Government Act, municipalities are required to collect education tax for the province. Unfortunately for municipalities, they are on the hook for the funds regardless if they can collect them.
Through the PERC program municipalities can apply for what is essentially a refund of education tax they have paid on behalf of oil and gas companies but could not collect because they are no longer in business. Initially, PERC allowed municipalities to apply for the 2015 through 2019 tax years, but it has since been extended until 2021. DIRC is a similar program where municipalities can apply for a refund for designate industrial taxes paid, but not collected from oil and gas companies.
Trident Exploration (Alberta) has the most outstanding taxes totalling $381,983.79 with penalties while Trident Exploration (WX) owes $48,026.47.
Houston Oil and Gas, a Calgary, Alberta-based oil and gas company that focused on acquiring and rejuvenating legacy oil and gas assets, owes $21,068.01. It should be noted the amounts owed by both Trident companies are for the 2020 tax year while the amount for Houston Oil and Gas is for the 2017 to 2020 tax years.
If their application is successful, under the PERC and DIRC the county would receive a $81,189.33 credit, which would be put towards the amount the municipality is required to submit for education and designated industrial taxes.
In addition to $451,048.27, councillors approved to write-off, Molzahn said so far this year oil and gas companies are in arrears another $943,000.
Molzahn said to cover the lost income from the taxes they are writing-off, a small portion, $21,068, will come from the Allowance for Uncollectible Tax Reserve for prior years the while the remaining $429,980 would come from the current year allowance.
The deadline to apply for both programs is Feb. 1, 2021. However, Molzahn suggested they apply as soon as possible as the PERC is capped at $10 million.
Coun. Marvin Schatz moved to write-off the amount owed.
"We have no other option. One way or another it is going to be written off, but this way we are able to recoup some of what was lost," he said.
In subsequent motions Coun. Darrell Troock and Coun. Bill Lane moved to apply to the PERC and DIRC programs.
Barry Kerton, TownandCountryToday.com
