The concept, implementation and administration of the Alberta Freehold Mineral Tax System are described. The procedures for generation and appeal of mineraltax assessments are clarified, with examples provided to show the most commongrounds Ear appeal. The discussion is intended to provide guidance to bothlessors and lessees by defining the basis and limitations of the assessment andappeal procedures.


The Freehold Mineral Taxation Act (1) enacted by the Government of the Provinceof Alberta, Canada provides that the owner of every producing Freehold mineralland title, or "right", is liable to taxation. The Mineral Rights Assessment Regulations under The Act set forth the rules to be used in assessing ‘petroleum’, ‘natural gas’, ‘coal’ and ‘salt’ rights. No assessment of either ‘coal’ or ‘salt’ rights has yet been made under The Act.

The taxation base derives from estimates of the Fair Actual Value (discountedto present worth) of the remaining reserves of petroleum and/ornatural gasrecoverable from each property, as determined according to the Mineral Rights Assessment Regulations (2) and Computational Methods of the Assessor (3, 4). The Assessor, to properly discharge his responsibilities, also retains theright to exercise judgment where there are uncertainties affecting the Fair Actual Value of a mineral right.

Payment of the Freehold mineral tax is the responsibility of the registeredowner of each right. The major portion of the expense is borne by the producing companies, who have leased the producing rights either directly or indirectlyfrom the registered owner.

Representatives of many of these companies have participated each year inanalysis and amendmentof the assessment methods, although their participationhas not constituted approval of the methods.

The commentary provided here deals with the history of assessment rules up to 1975 (3, 4), and consultation of the assessment rules for 1976 will berequiredto interpret the most recent assessments.


The first Mineral Tax Act came into force in 1923, (5) but was found to beultra wires and was disallowed in 1924. The subsequent Mineral Taxation Act. 1938 (6) applied one-third of one cent per acre to all minerals. In 1941 this Act was superseded (7) by taxation of minerals excluding coal at rates of one-half cent per acre per year on non-producing titles and two mills per year on revenue.

In 1945 The Act was again replaced, (8) with minor revisions in the acreage taxand with mill rates escalated from 4 mills in 1945 to 8 mills after 1946. Other Mineral Tax Acts were enacted subsequently and consolidated in 1970. The present Freehold Mineral Tax System derives from the Natural Resource Revenue Plan (9) approved July 28, 1972 by the Cabinet, which included the following considerations (10): 1. "The Cabinet has concluded that a gross increase inannual revenues to the Government of approximately $70 million commencing in1973 would be a fair and reasonable additional return to the citizens of Alberta for their ownership interests in this depleting and non-recurringresource."

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