Natural gas tax credit

The natural gas tax credit refunds a portion of the B.C. corporate income tax paid by qualifying corporations. 

On this page

• Overview
• Register and apply
• Required documents
• Amending your natural gas tax credit application
• Annual credit limit

Overview

The credit is available to qualifying corporations that own natural gas immediately after the natural gas has passed through a liquefied natural gas (LNG) facility inlet meter for a major LNG facility during the tax year. 

The maximum credit you can claim in a tax year is the least of:

• The qualifying corporation's natural gas tax credit, calculated at 3% of the cost of natural gas notionally acquired at an LNG facility inlet meter for a major LNG facility for the tax year plus any unused natural gas tax credit carried forward from a previous year
• The qualifying corporation’s B.C. corporate income tax payable after all other B.C. income tax credits have been deducted, or
• The amount used to reduce the qualifying corporation’s B.C. corporate income tax to the amount that would be payable if the B.C. general corporate income tax rate was 9%

Any unused natural gas tax credit amount can be carried forward and used in subsequent tax years, if you continue to be a qualifying corporation.

If there is an amalgamation or wind up of a subsidiary, the qualifying corporation may be able to use the unused natural gas tax credit carried forward from the predecessors or the subsidiary.

Qualifying corporations

Only qualifying corporations are eligible to claim the natural gas tax credit.

A qualifying corporation is a corporation:

• That has a permanent establishment in B.C. during the tax year
• Whose principal business in B.C. during the tax year consists of one or more of the following:
  • The exploration for or development of petroleum or natural gas
  • The production, gathering, processing, refining, marketing, storage or disposal of petroleum, natural gas or LNG
  • The construction, use, or operation of a major LNG facility
  • The liquefaction of natural gas
  • A prescribed activity

To claim the credit, you may be asked to prove that you are a qualifying corporation.

Major LNG facility

A major LNG facility is a liquefied natural gas facility in B.C. that is used or intended to be used to process natural gas and is designed and built to be capable of producing 2 million tonnes or more of LNG per year.

The facility locations table describes the current major LNG facilities and effective dates when the facility became a major LNG facility.

LNG facility inlet meter

An LNG facility inlet meter is a meter where the volume of natural gas is first measured after the natural gas is delivered to the major LNG facility.

Register and apply

You must complete the following two steps to apply for the natural gas tax credit:

1. You must register online using the link below for a natural gas tax credit (NGTC) account number. You'll need this number to apply for the tax credit.
   Register
2. Once you've received your NGTC account number, you can apply online using the link below or directly through eTaxBC. Complete applications for the tax credit must be received within 18 months after the end of the tax year.
   Apply

Contact us to request a copy of the guide for completing the natural gas tax credit online application.

Required documents

The qualifying corporation must file and submit the following forms and documents with the natural gas tax credit application to the B.C. Ministry of Finance to claim and receive the natural gas tax credit:

• A natural gas tax credit application through eTaxBC for the tax credit within 18 months after the end of the tax year

• Proof, within 3 years after the end of the tax year, that all B.C. and federal income taxes for the tax year have been paid

• Copies of the most recent notices of assessment or reassessment issued by the Canada Revenue Agency (CRA) for the tax year relating to your T2 Corporation Income Tax Return 

• Monthly records to confirm the values from your Monthly Gas Worksheets for gas directly owned by your corporation. You are not required to attach these supporting documents for gas you owned through a partnership, however these records should be retained in case we request them. These values include the: 
  • LNG facility inlet volume  
  • Heating value for gas owned at the LNG facility inlet meter
  • Energy content for gas owned at the LNG facility inlet meter

Additional documents will be required if the corporation: 

• Amalgamated with another corporation in the tax year 
• Wound up a subsidiary in the tax year
• Is a partner in a partnerships that owns gas at a major LNG facility inlet meter, or
• Wants to authorize a representative or arrange for direct deposit. See Forms and publications for corporate income tax credits

Records to support your application must be maintained. See Recording the cost of natural gas to find the data elements you'll need to enter on your application.

Note: You will not be able to submit files online greater than 50 MB. If your file exceeds 50 MB in size, contact Taxpayer Services at 1-877-388-4440 for assistance.

Amending your natural gas tax credit application

You may file an amended application to increase the tax credit within 18 months after the tax year ends or within 90 days of the latest T2 Notice of Reassessment. If amending an application to decrease your natural gas tax credit, you may amend your claim within 4 years of the initial notice of determination or within 1 year after your latest T2 Re-assessment.

Changes to your previously-filed application are required when:

• Your prior application is inaccurate, or
• You're issued a Notice of Reassessment of your T2 Corporation Income Tax Return which changes a relevant amount to the calculation of the tax credit

You must notify us of inaccurate applications or relevant changes by amending your previous application through eTaxBC.

Relevant changes may include changes to the following:

• Form T2SCH427 – Income subject to British Columbia general corporate tax rate
• Form T2SCH427 – British Columbia tax before credits
• Form T2SCH5 – Net British Columbia tax payable or refundable tax credit
• Transportation costs
• Allocations from partnerships
• Your permanent establishment in B.C.
• Anything else that would result in the inaccuracy of the previously assessed natural gas tax credit application

Supporting documents for gas volumes, partnership allocations, amalgamations, or wind-ups are not required when there are no changes to those amounts.

Proof of payment such as the Statement of Account from the CRA is not required again if the amended application does not increase the amount payable to the CRA.

If there are no changes to the required attachments since the prior filing, attach a statement stating that there have been no changes to the attachments since the last application was filed.

Notification requirement for T2 Reassessments

If your corporation is issued a Notice of Reassessment by the CRA, notify us within 90 days of the date on the notice whether or not the reassessment changes an amount relevant to the calculation of the credit.

If the reassessment:

• Changes an amount relevant to the calculation of the credit, you must also file an amendment to your natural gas tax credit application within 90 days of the date on the Notice of Reassessment
• Does not change an amount relevant to the calculation of the credit, you may notify us by sending an eTaxBC message with a copy of your Notice of Reassessment

Failure to notify us within 90 days of a CRA reassessment that results in a change to an amount relevant to the calculation of the credit may result in penalties equal to the greater of $100 or $25 per day to a maximum of $2,500 per notification.

Legislation

The following legislation applies to the natural gas tax credit:

• Income Tax Act (B.C.)
• Natural Gas Tax Credit Regulation