Providing Tax Relief for Rig Equipment

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The Drilling Rig (Provincial Sales Tax – Related Equipment) Remission Regulations were enacted under the Financial Administration Act of 1993 through Order in Council 466/2023, filed on September 7, 2023. These regulations provide specific provisions for tax remission related to certain equipment purchases within the drilling industry in Saskatchewan. The primary purpose of these regulations is to offer a remission of the Provincial Sales Tax (PST) for qualifying purchases of drilling rig-related equipment. In this context, “remission” refers to the cancellation of tax owed on specific purchases, while “tax” pertains to the PST mandated by The Provincial Sales Tax Act. The regulations clarify definitions, including the scope of “related equipment,” and indicate that definitions from the Act apply.

Eligible purchasers can receive a complete remission of the PST for specified equipment purchased between April 1, 2017, and March 31, 2023. Eligible items include pipe racks and structures housing specific drilling-related equipment such as circulating systems (including mud pumps, mixers, and tanks), blowout prevention systems (including blowout preventers and manifolds), boilers, shale shakers and shaker tanks, as well as engine and generator sets that power drilling rigs or service rigs.

To claim a remission, purchasers must submit an application to the relevant minister by March 31, 2025. This application must meet the minister’s criteria and provide sufficient information to demonstrate both the purchaser’s entitlement to the remission and the amount being claimed. Once a remission is approved, the minister is obligated to pay the claimed amount to the purchaser. However, if the purchaser has outstanding debts owed to the Crown, the minister can apply the remission to offset these debts. If the debt equals or exceeds the remission amount, the entire remission can be used for settlement. If the debt is less, only the necessary portion will be applied, with any remaining balance paid to the purchaser.

Additionally, the minister can classify any granted remission as an overpayment if the purchaser is found to have made false or misleading statements, omitted essential information, or failed to comply with the regulations. In such cases, the amount considered an overpayment becomes a debt owed to the Crown and can be recovered through various legal means authorized by the Financial Administration Act or other relevant legislation.

The Drilling Rig Remission Regulations serve as a financial relief mechanism by offering full tax remission for eligible equipment purchases within a specified timeframe. The regulations detail a clear application process and conditions under which remissions can be granted, adjusted for outstanding debts, or classified as overpayments.

Saskatchewan (OIC 466/2023) September 15, 2023