Interim guidance for producing ethanol for use in alcohol-based hand sanitizers: Excise tax implications
The Canada Revenue Agency (CRA) administers the Excise Act, 2001. The Act governs the federal taxation of several commodities, including spirits, and regulates activities involving the manufacture, possession and distribution of these products.
Spirits are any material or substance containing more than 0.5% absolute ethyl alcohol by volume other than:
- denatured alcohol
- specially denatured alcohol
- fusel oil or other refuse produced as a result of the distillation process
- an approved formulation
- any product containing or manufactured from a material or substance that is not consumable as a beverage
To produce hand sanitizer legally using non-duty-paid alcohol in Canada, a person may require a spirits licence, a user's licence and/or a specially denatured alcohol registration or recognized formulation. While a formulation for one of these licences may be required in order for CRA to grant a licence, these licences are separate from Health Canada's product or site licences.
To sell a finished hand sanitizer legally in Canada, a manufacturer must acquire the appropriate market authorizations from Health Canada.
The requirements under the Act will vary depending on the circumstances of each case and the proposed activities to be undertaken.
You can find contact information for your regional excise duty office by accessing CRA's excise duties, excise taxes, fuel charge and air travellers security charge page. Your regional office is your best source for information on excise taxes.
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