EDM3-1-3 Registered users

Excise Duty Memorandum

July 2003

Except as otherwise noted, all statutory references in this memorandum are to the provisions of the Excise Act, 2001. The information in this memorandum does not replace the law found in the Act and its regulations. If this information does not completely address your situation, refer to the Act or regulations or contact your regional excise office for additional information. The offices are listed at Contact information – Excise and Specialty Tax Directorate.

On this page

• Requirement for a user's registration
• Obtaining a user's registration
• Possession of packaged spirits by a registered user
• Restrictions imposed upon a registered user
• Removals and returns of spirits
• Spirits destruction
• Maintaining records and filing returns
• Offences and penalties

Requirement for a user's registration

User's registration (s 16)

1. The Act provides for the issuance of a registration that authorizes certain persons (that is, registered users) to possess and use non-duty-paid packaged spirits for specific purposes.

Meaning of spirits (s 2)

2. Spirits means any material or substance containing more than 0.5% absolute ethyl alcohol by volume, excluding wine, beer, vinegar, denatured alcohol, specially denatured alcohol, fusel oil or other refuse produced as a result of the distillation process, or an approved formulation. Also excluded from the definition of spirits is any product that is not consumable as a beverage that contains, or is manufactured from, beer, vinegar, denatured alcohol, specially denatured alcohol, fusel oil or other refuse produced as a result of the distillation process or an approved formulation. 

Meaning of non-duty-paid (s 2)

3. Non-duty-paid, in respect of packaged spirits, means that excise duty, other than special duty, has not been paid on the spirits.

Users of non-duty-paid packaged spirits (s 16)

4. A user's registration authorizing the use of non-duty-paid packaged spirits may be issued to:

1. a scientific and research laboratory in receipt of annual aid from the Government of Canada or a province, for the use of spirits for scientific purposes;
2. a university or other post-secondary educational institution recognized by a province, for the use of spirits for scientific purposes;
3. a health care facility, for the use of spirits for medicinal and scientific purposes; or
4. a health institution in receipt of annual aid from the Government of Canada or a province, for the use of spirits for medicinal and scientific purposes.

Obtaining a user's registration

5. Instructions and requirements for obtaining a user's registration are provided in Memorandum EDM2-4-1, Obtaining a registration.

Possession of packaged spirits by a registered user

Possession (subpara 88(2)(a)(iii))

6. Registered users may possess and use only packaged spirits. They may not possess or use bulk spirits, bulk wine, or non-duty-paid packaged wine.

Meaning of packaged (s 2)

7. To package spirits means to place them in a container with a capacity of not more than 100 litres that is ordinarily sold to consumers without being further repackaged into smaller containers. Packaging spirits also includes placing them into a marked special container.

Meaning of mark and special container (s 2)

8. A marked special container of spirits is a container with a capacity of more than 100 litres but not more than 1500 litres, that is marked in the prescribed form and manner.

Draft Regulations Respecting the Marking of Special Containers (s 1 and 2)

9. The marking on a special container must be legible, clearly visible during normal handling, and capable of remaining in place until the alcohol in the special container is completely removed. The marking of a container obtained by a registered user must also indicate, in English and French, that:

• the contents of the container are packaged spirits; and
• the container is intended for delivery to and for use by a registered user.

Restrictions imposed upon a registered user

Unauthorized removal of spirits (ss 92(1))

10. Only a registered user may remove spirits from a marked special container that is marked for delivery to and for use by the registered user.

Restrictions (s 91)

11. Registered users may only use non-duty-paid packaged spirits in accordance with their registration, or for purposes of analysis in an approved manner. Registered users may also dispose of packaged spirits by returning them, under prescribed conditions, to the excise warehouse licensee who supplied them, or by destroying them in a manner approved by the Canada Revenue Agency (CRA).

Meaning of excise warehouse licensee (s 2 and 19)

12. An excise warehouse licensee means a person who holds an excise warehouse licence authorizing the person to possess, in their excise warehouse, non-duty-paid packaged alcohol (that is, spirits or wine) or manufactured tobacco or cigars that are not stamped.

13. The use of non-duty-paid packaged spirits by a registered user in any manner or process other than as described in paragraph 11 of this memorandum is a contravention of the Act.

Removals and returns of spirits

Removal of packaged spirits (subpara 151(2)(a)(vii) and (c)(ii))

14. Excise duty is not payable on packaged spirits removed from an excise warehouse for delivery to a registered user for use in accordance with their registration.

Return of packaged spirits (Return of Packaged Alcohol to an Excise Warehouse Regulations s 3)

15. Registered users may return non-duty-paid packaged spirits to the excise warehouse licensee who supplied them if, at the time of their return to the warehouse, the spirits are packaged in the same container in which they were packaged when they were removed from the excise warehouse, and the container:

1. has not been opened; or
2. if opened, was opened by the registered user solely for the purpose of analysis.

Spirits destruction

para 91(d)

16. A registered user may dispose of non-duty-paid packaged spirits by using a method of destruction approved by the CRA. The approval must be obtained by the registered user prior to the destruction of the packaged spirits.

Maintaining records and filing returns

Keeping records (ss 206(1))

17. Every registrant under the Act is required to maintain all records that are necessary to determine whether they are in compliance with the Act.

18. Additional information on the requirement to maintain records is available in Memorandum EDM9-1-1, General requirements for books and records.

Filing returns (s 161)

19. Registered users are only required to file a return using Form B270, Excise Act, 2001 – Excise Duty Return – Non-Licensee, for a fiscal month in which they have incurred an excise duty liability.

Offences and penalties

Failure to comply

20. If a registered user fails to comply with the restrictions of their registration, they may be guilty of an offence or subject to a penalty under the Act.

21. Additional information on offences and penalties is available in Memorandum EDM1-6-1, Administrative penalties under the Excise Act, 2001.

Further information