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Excise and Specialty Tax Program

Legislative Policy and Regulatory Affairs Branch
Excise and Specialty Tax Directorate

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Overview & Privacy Impact Assessment (PIA) Initiation 

Government institution

Canada Revenue Agency

Government official responsible for the PIA

Soren Halverson
Assistant Commissioner
Legislative Policy and Regulatory Affairs Branch

Head of the government institution or Delegate for section 10 of the Privacy Act

Lia Jackson
Acting Director General
Access to Information and Privacy Directorate

Name of program or activity of the government institution

Policy, Rulings and Specialty Tax 

Standard or institution specific class of record:

Excise Duties, Taxes and Special Levies
CRA LPRAB 030

Standard or institution specific personal information bank:

Excise and Specialty Tax
CRA PPU 062
TBS registration number: 003128

Legal authority for program or activity

The Canada Revenue Agency (CRA) collects personal information under the authority of section 5 of the Canada Revenue Agency Act. This Act mandates the CRA to help administer and enforce the legislation under the responsibility of the minister of national revenue.

The Excise and Specialty Tax Program is responsible for administering the non-GST provisions of the Excise Act and the Excise Act, 2001, as well as the non-GST/HST portions of the Excise Tax Act, Select Luxury Items Tax Act, Greenhouse Gas Pollution Pricing Act, 2018, Air Travellers Security Charge Act, the Softwood Lumber Export Act, 2006, and the Importation of Intoxicating Liquors Act.

Excise duty stamping regime

The minister of national revenue has sole authority, under subsections 25.1(4), 158.03(4) and 158.36(4) of the Excise Act, 2001, to:

Specific parts of the Excise Act, 2001, state the regulatory and duty imposition positions for:

Also, Part 2 of the Act allows the minister to issue, refuse or cancel licences.

Section 208 of the Excise Act, 2001 allows for the requirement to provide records or information to administer or enforce the Act. As well, subsection 206(3) states that the minister may specify in writing the form a record is to take and any information the record must contain.

The authority to disclose information to administer the Excise and Specialty Tax Program is contained in subsection 211(6).

Excise duty commodities

Excise Act, 2001

The minister of national revenue has the authority under subsection 8 of the Excise Act, 2001 to regulate how alcohol, cannabis, tobacco, and vaping products are produced, manufactured, and packaged as well as to impose duties on these products.

Specifics parts of the Act identify the regulatory and duty imposition positions for:

As well, Part 2 of the Act allows the minister to issue, refuse, or cancel licences.

General provisions about excise duty and other amounts payable on alcohol, cannabis, tobacco, and vaping products are in Part 5 of the Excise Act, 2001.

Specifically:

Excise Act

Under the Excise Act, the minister has the authority to regulate the production of beer products as well as to impose duties on these products.

Part 3 of the Act specifies the regulatory and imposition positions. Further to this, Part 1 allows the Minister to issue, refuse, or cancel a licence. General provisions about excise duty and other amounts payable are also in Part 1 of the Act.

Section 33 allows for the requirement to provide records or information to administer or enforce the Act. As well, section 31 states that the minister may specify the form a record is to take and any information the record must contain.

Officials are given the authority to exercise powers or perform the duties and functions of the minister of national revenue through administrative delegation instruments signed either by the minister or the commissioner.

Fuel charge

According to section 93 of the Greenhouse Gas Pollution Pricing Act, 2018, the minister of national revenue is tasked with administering and enforcing the fuel-charge related initiatives.

Section 104 of that act requires every person that pays or has to pay a charge and every person that files a return or claims a rebate to keep and provide all records necessary for administering or enforcing the Act.

Subsection 107(2) of the Act states that a government official or representative cannot use or disclose confidential information unless section 107 authorizes it.

Subsection 107(5) states that[A1]  the minister may provide appropriate persons with any confidential information that may reasonably be regarded as necessary solely for a purpose relating to the life, health or safety of an individual or to the environment in Canada or any other country.

Summary of the project, initiative or change

Overview of the Program or Activity

The Excise and Specialty Tax Program is responsible for:

The program works with other agencies and departments (for example, Canada Border Services Agency, Health Canada, and Environment and Climate Change Canada), provinces, and territories to develop, draft, and consult on new legislation and regulations.

Administering excise duties and specialty taxes has a broad impact on the CRA due to the very high profile of the commodities involved.

The program involves compliance activities regarding licensees (individuals and other entities) and registrants who:

Excise stamping regime

A prescribed form to request registration to the stamping system may be submitted by a:

The form and supporting documents provide information such as the:

The Excise and Specialty Tax Program is responsible for determining whether:

The program officer confirms an active status of the licensee or prescribed person account as well as the amount and status of the security. Also, the officer will make sure a delivery address is valid since the stamps cannot be shipped to a postal box. Once the officer verifies the requirements, they will register the applicant to the stamping system and create an account in the online stamp ordering system. The listed authorized users will receive, by automated messaging, a user ID and temporary password that will allow them to order excise stamps and verification devices. 

Alcohol, cannabis, tobacco, or vaping products

To ensure a person is eligible for a licence or registration relating to alcohol, cannabis, tobacco, or vaping products, the Excise and Specialty Tax Program is responsible for determining whether:

Program officers review the information on the prescribed application forms to decide whether a person is eligible for a licence or registration under the Excise Act, 2001. If they decide the person is eligible, they send a letter to that person confirming that the CRA has granted the person the licence or registration, as well as confirming the effective and expiry dates.

Information required under the Regulations includes:

If the person does not meet any of the requirements under the Regulations, the program officer will send the person a letter denying the application and telling the person why they were not eligible for the licence.

Beer products  

To ensure a person is eligible for a licence for beer products, the Excise and Specialty Tax Program is responsible for deciding whether the person satisfies the requirements set out in parts 1 and 3 of the Excise Act.

Program officers review the information on the prescribed application form to figure out whether a person is eligible for a licence. If they decide the person is eligible, they send a letter to that person confirming that the CRA has granted the person the licence and confirming the effective and expiry dates of their licence and a copy of any documents related to the premises and equipment signed by the surveying officer.

Information required under the Excise Act, includes:

If the person does not meet any of the requirements under the Excise Act, the program officer will send the person a letter denying the application and telling the person why they were not eligible.

The CRA may share or verify the information it collects from the person with other federal, provincial/territorial government institutions to the extent authorized by law. If the person has an existing business number, the CRA will use the business number system to verify that person’s information and compliance with other acts it administers. If the person does not have a business number, the CRA will use tombstone data it currently has to verify the person’s personal information.

Fuel Charge

The fuel charge is a regulatory charge on fossil fuel emissions. The Greenhouse Gas Pollution Pricing Act, 2018 lists 21 types of fuels and their respective rates. Those rates reflect a carbon pollution price of $50 per tonne of carbon dioxide equivalent (CO2e) in 2022 and will rise by $15 per tonne annually to reach $170 per tonne in 2030. The Act imposes the charge on the production or use of these fossil fuels in listed provinces.

There are 12 types of registration, which can be mandatory or voluntary depending on the type of activities performed. The Act also establishes a framework within which certain persons (registrants and non-registrants) have various entitlements along with specific obligations.

The program is responsible for delivering compliance activities, including verifying the proper calculation of the fuel charge and proper allocation to the province or territory where the fuel was used, imported to, or sold in.

Scope of the Privacy Impact Assessment

This privacy impact assessment has two phases.

Phase 1 includes how the Excise and Speciality Tax Program collects, uses, transfers, and safeguards personal information relating to the:

Phase 1 also includes the compliance, rulings and interpretation components of those program activities.

Phase 2 includes how the Excise and Speciality Tax Program collects, uses, transfers, and safeguards personal information relating to the:

The second phase will also include the compliance component of those program activities.

This privacy impact assessment does not include fuel charge registration or returns processing since this is done by the Assessment, Benefit, and Service Branch.

Risk identification and categorization

A) Type of program or activity

Compliance / Regulatory investigations and enforcement  

Level of risk to privacy: 3

Details:

Excise duty commodities

To make sure a person is eligible for a licence or registration regarding alcohol, cannabis, tobacco, or vaping products, the Excise and Specialty Tax Program is responsible for determining whether a person satisfies the requirements set out in subsections 2 and 3 of the Regulations Respecting Excise Licences and Registrations. Program officers review the information on the prescribed application forms to decide if a person is eligible for a licence or registration under the Excise Act, 2001.

In addition, a compliance program is in place to ensure a person complies with the regulatory and taxing provisions related to alcohol, cannabis, tobacco, or vaping products in Part 3, 4, Part 4.1 and part 4.2 of the Act. Program officers review the records required to be kept under section 206 of the Act and section 13 of the Regulations.

To esure a person is eligible for a licence regarding beer products, the Excise and Specialty Tax Program is responsible for determining whether a person satisfies the requirements set out in parts I and III of the Excise Act. Program officers review the information on the prescribed application form to decide whether a person is eligible for a licence.

In addition, a compliance program is in place to ensure a person complies with the regulatory and taxing provisions related to beer under Part III of the Act. Program officers review the records required to be kept under section 31 of the Act.

Excise duty stamps

Only authorized persons are eligible to purchase excise stamps. For this reason, the Excise and Specialty Tax Program is responsible for determining whether a person applying to the stamping system has:

For the purpose of registering a stamp purchasing account and users, the prescribed form collects the:

The program will send an eligible applicant an automated email with their user ID and a temporary password once it registers the applicant to purchase stamps in the online stamp ordering system. In addition, the program will take a compliance step before approving each stamp order: it will review the stamp order to ensure that the licensee or prescribed person has filed all the required returns, has sufficient financial security, and has stamp ordering capacity. If one of these items is missing, the program will deny the stamp order and inform the person.

Fuel Charge

The Excise and Specialty Tax program does compliance activities, including post-assessment audit verification of fuel charge amounts reported and rebates claimed on fuel charge returns.

B) Type of personal information involved and context

Sensitive information such as a social insurance number; medical, financial or other personal information; the context surrounding the personal information; personal information of minors, incompetent individuals, representatives acting on behalf of the individual. 

Level of risk to privacy: 3

Details:

Personal details include first name, last name, date of birth, phone number, personal home address, financial information, business number, operating name, business address, mailing address, location where records are kept in and outside of Canada, and the name, title, telephone number and signature of the authorized individual.

C) Program or activity partners and private sector involvement

Private sector organizations or international organizations or foreign governments

Level of risk to privacy: 4

Details:

The Excise and Specialty Tax Program interacts and shares information with other federal institutions, provincial governments as well as private sector organizations.

The program and the Canada Border Services Agency exchange information back and forth to effectively administer and enforce their respective laws. The information exchanged includes shipment information (amounts and value) as well as information on whether the importer is a licensee or a prescribed person under the Excise Act or Excise Act, 2001.

For cannabis duties, the program receives information from Health Canada to validate that the applicant has received a licence under the Cannabis Act and its regulations. It does this because the person must hold two valid licences, one from Health Canada and another from the Excise and Specialty Tax Program.

For fuel charges, the Excise and Specialty Tax Program is working on a memorandum of understanding to share information with Environment and Climate Change Canada. The program administers Part 1 of the Greenhouse Gas Pollution Pricing Act, 2018, and Environment and Climate Change Canada administers Part 2. Large emitters in listed provinces and registered under Part 2 can also register under Part 1 and have their fuel delivered without the fuel charge. Environment and Climate Change Canada will give the program the information to validate the emitter’s registration and the effective date of registration. At this time, the program is not sharing any information with Environment and Climate Change Canada. The program expects the memorandum of understanding to be in place sometime in the 2023‑2024 fiscal year.

Subsection 20(4) of the Greenhouse Gas Pollution Pricing Act, 2018 applies a charge on the importation of fuels to be collected under the Customs Act that persons, including certain registrants, must pay. The program is in early stages of a written collaborative agreement in which the CRA will share limited registration data with Canada Border Service Agency agents to help those agents validate fuel importers’ registration and collect charges if required. The shared information would include the name of the business, its registration status, its business number and its registration type. The written collaborative agreement is expected to be completed in late 2023 or early 2024.

The enhanced stamping regime for tobacco, cannabis, and vaping products allows the Minister of National Revenue to authorize a single provider (a specialized printer) to supply the stamps to persons the Excise and Specialty Tax Program has approved. The Canadian Bank Note Company Ltd., in partnership with SICPA Holding SA, is the single authorized stamp supplier to design, manufacture, and distribute excise stamps for tobacco, cannabis, and vaping products.

SICPA Holding SA, as a subcontractor under the contract between Canadian Bank Note Company Ltd. and the CRA, maintains and facilitates the stand-alone system (database program), as outlined in the agreement with SICPA Holding SA. SICPA Holding SA is a global provider of security inks and secured identification.

As detailed in the stamp-service contract between the CRA and the Canadian Bank Note Company Ltd., the Canadian Bank Note Company Ltd. has restricted access to the system that allows it to view approved orders so it can fulfill and deliver those orders (provincial and federal stamps). The CRA restricts the personal information it shares with the Canadian Bank Note Company Ltd. to only what is necessary for the bank note company to be able to produce and deliver the stamps to the designated person and to the preapproved address.

While some of the provinces also have stamping or marking legislation that regulates and controls the possession and sale of tobacco within their jurisdictions, many have adopted the federal stamping regime. When participating in the federal stamping regime, provinces must sign a memorandum of understanding with the CRA to share registrants’ personal information with the Excise and Specialty Tax Program, approved private sector organizations, and provinces.

As part of the rulings and interpretation workload, the program must publicize the decision. As such, the program shares severed response letters with four publishing houses . All four publishers hold a licence agreement with the Canada Revenue Agency. The letters hold no personal information as they have been severed by the program prior to releasing. The publishing houses are ERNST & Young Electronic Publishing Services Inc., Tax Interpretations Inc., Thomson Reuters Canada Limited, and Wolters Kluwer Limited.

D) Duration of the program or activity

Long-term program 

Level of risk to privacy: 3

Details:

Long-term initiatives stem from amendments to the Excise Act, 2001 and Greenhouse Gas Pollution Pricing Act, 2018 and have no expected end date. 

E) Program population

The program affects certain individuals and businesses for external administrative purposes.

Level of risk to privacy: 3

Details:

This program affects individuals, partnerships and corporations:

F) Technology & privacy

  1. Does the new or modified program or activity involve the implementation of a new electronic system, software or application program including collaborative software (or groupware) that is implemented to support the program or activity in terms of the creation, collection or handling of personal information?

    Risk to privacy: Yes

  2. Does the new or modified program or activity require any modifications to IT legacy systems and/or services?

    Risk to privacy: No

  3. Does the new or modified program or activity involve the implementation of one or more of the following technologies?

Enhanced identification methods - this includes biometric technology (i.e. facial recognition, gait analysis, iris scan, fingerprint analysis, voice print, radio frequency identification (RFID), etc.) as well as easy pass technology, new identification cards including magnetic stripe cards, "smart cards" (i.e. identification cards that are embedded with either an antenna or a contact pad that is connected to a microprocessor and a memory chip or only a memory chip with non-programmable logic).

Risk to privacy: No

Use of Surveillance - this includes surveillance technologies such as audio/video recording devices, thermal imaging, recognition devices, RFID, surreptitious surveillance/interception, computer aided monitoring including audit trails, satellite surveillance etc.

Risk to privacy: No

Use of automated personal information analysis, personal information matching and knowledge discovery techniques - for the purposes of the Directive on PIA, government institutions are to identify those activities that involve the use of automated technology to analyze, create, compare, identify or extract personal information elements. Such activities would include personal information matching, record linkage, personal information mining, personal information comparison, knowledge discovery, information filtering or analysis. Such activities involve some form of artificial intelligence and/or machine learning to uncover knowledge (intelligence), trends/patterns or to predict behavior.

Risk to privacy: Yes

G) Personal information transmission

The personal information is transmitted using wireless technologies.

Level of risk to privacy: 4

Details:

An Excise and Specialty Tax program employee has to manually transfer the personal information from one system to another. Because of the hybrid work model, they must transmit, the information using wireless technologies; however, the VPN protects the information. An employee working in a CRA office can transmit the information via protected wired technologies.

Requests received in writing are digitized and stored in the Document Management Portal so Excise and Specialty Tax program employees can access the requests later.

H) Potential risk that in the event of a privacy breach, there will be an impact on the individual or employee

Details:

In the event of a privacy breach, the potential impacts to the individual or business may be financial loss, reputational harm and possible legal implications. As with all taxpayer information, if the protection of personal information is somehow compromised or disclosed without statutory authority, the taxpayer may become a victim of identity theft. If that happens, their information may be used without their knowledge in ways that could result in a financial or reputational harm.

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