Oil and gas royalties and freehold production tax
When oil and natural gas resources are produced in B.C., the province charges a royalty or a freehold production tax. What you are charged depends on who owns the rights to the underlying oil and natural gas on the land producing the resource:
Royalties are charged when the government owns the oil and natural gas rights.
The freehold production tax is charged when the government doesn’t own the oil and natural gas rights.
Royalties and freehold production taxes are covered in the same legislation and both are commonly referred to as royalties.
The money raised by oil and natural gas royalties and freehold production taxes is used to fund vital social services such as education and health care and is sometimes shared with First Nations communities under revenue sharing agreements.
Producers pay royalties or taxes and are often referred to as a royalty taxpayer.
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