Collection of Tax Arrears

Res #: 5-21M
Number: 5
Year: 2021
Midterm: Yes
Expired: No
Responses Received: Yes
Departments: Saskatchewan Ministry of Energy and Resources

WHEREAS the ability of municipalities to collect arrears from resource companies is limited; and
WHEREAS the Tax Enforcement Act and the Municipalities Act provide for the collection of tax arrears by issuing a direction to pay to the purchaser of a resource as a means of collecting arrears from a resource company; and
WHEREAS the practices of the Ministry of Energy and Resources has made utilizing this option difficult and municipalities find it difficult to source the purchaser of the resource, or the amount generated from a direction to pay pursuant to Section 317 of the Municipalities Act which may not be sufficient to cover the taxes due; and
WHEREAS the process of tax enforcement is limited in its effectiveness for non-producing and low production wells; and
WHEREAS there are mechanisms in place that could streamline tax enforcement procedures for municipalities when dealing with arrears of resource companies, namely the procedures that the Ministry of Agriculture has in place for lease land where an administrator in a municipality notifies the ministry regarding arrears of taxes to the Ministry and the lease may be cancelled if arrears are not paid or a payment plan for the arrears of taxes is not mutually agreed upon.
BE IT RESOLVED that SARM lobby the provincial government to amend the Municipalities Act, the Tax Enforcement Act and the Oil and Gas Conservation Act to have the operating license of a resource company suspended if they do not keep municipal taxes current.

Responses From: Saskatchewan Ministry of Energy and Resources

March 1, 2022

Our government is aware of the challenges that certain municipalities are facing when it comes to collecting royalty and taxation revenue from some companies operating on their land. At the same time, we remain mindful of the importance of the oil and gas sector to our province’s economy and the extent to which national and international pressures have hampered resource sectors in recent years.

The Oil and Gas Conservation Regulations, 2018 (s. 1 33{5}), allow the Ministry of Energy and Resources (Ministry) to share a purchaser’s information with an RM when taxes owing have been in arrears for a period of 12 consecutive months. It is important to note in these circumstances, specifically:

  • Oil purchaser information is collected by the Ministry and provided to an RM upon request.
  • Gas purchaser information is not collected by the Ministry, as it is not required for the purposes of royalty and/or tax calculations. Unfortunately, therefore, requests from RMs for such information cannot be accommodated.

There is no authority for the Ministry under The Oil and Gas Conservation Act (OGCA), or regulations, to enforce payment of these types of debts (i.e., RM taxes). The Act and regulations provide enforcement tools, such as suspension of operations, only where there is non-compliance with respect to specific obligations under the OGCA. The obligation of oil and gas companies to pay debts tied to a private contract, or under the auspice of other legislation such as The Municipalities Act, is not contemplated under the OGCA.

That said, we continue to enhance our oversight of the oil and gas sector and recently announced The Financial Security and Site Closure Regulations (FSSCR), expected to come into force in 2022, which provide the basis for additional financial scrutiny of oil and gas licensees.

As additional changes to the FSSCR and other oil and gas legislation are considered, we will continue to examine opportunities to further strengthen obligations and eligibility requirements for holding an oil and gas license.

Hon. Bronwyn Eyre – Minister of Energy and Resources