EDM2-1-1 Licence Types
This version replaces the one dated March 2003.
The Excise Act, 2001 requires a person to obtain a licence to perform certain restricted activities or to benefit from certain privileges related to alcohol and tobacco. This memorandum explains the types of licences available under the Act.
All legislative references in this publication are to the Excise Act, 2001 (the Act) unless otherwise specified.
The information in this memorandum is for reference purposes only and does not replace the Excise Act, 2001 or its regulations. Should there be any discrepancy between the information in this memorandum and that contained in the Act or its regulations, the legislative provisions apply. If the information in this publication does not completely address your particular situation, you may wish to refer to the Act or appropriate regulation, or contact any CRA regional excise duty office for additional information. These offices are listed in Excise Duty Memorandum EDM1-1-2, Regional Excise Duty Offices.
Table of Contents
1. The following terms are used in this memorandum and are defined in section 2 of the Act:
Accredited representative means a person who is entitled under the Foreign Missions and International Organizations Act to the tax exemptions specified in Article 34 of the Convention set out in Schedule I to that Act or in Article 49 of the Convention set out in Schedule II to that Act.
Alcohol means spirits or wine.
An approved formulation is a product that is made with alcohol by a licensed user in accordance with a formula that has been approved by the CRA. It may also be an imported product that, in the opinion of the CRA, would be an approved formulation if it were produced in Canada by a licensed user.
Bulk alcohol, in respect of alcohol, means alcohol that is not packaged.
A liquor authority is a government board, commission or agency that is authorized by the laws of a province or territory to sell intoxicating liquor.
Manufacture, in respect of tobacco products, includes any step in the preparation or working up of raw leaf tobacco into the tobacco product. It includes packing, stemming, reconstituting, converting or packaging the raw leaf tobacco or tobacco product.
Manufactured tobacco means every article, other than a cigar or packaged raw leaf tobacco that is manufactured in whole or in part from raw leaf tobacco by any process. Examples of manufactured tobacco include fine cut tobacco and cigarettes.
A marked special container means:
- in respect of spirits, a container of a capacity greater than 100 litres, but not more than 1,500 litres, that has been marked in a prescribed form and manner to indicate that it is intended for
- delivery to and for use by registered users or
- delivery to and use at bottle-your-own premises;
- in respect of wine, a container of a capacity greater than 100 litres that is marked in the prescribed form and manner to indicate that it is intended for delivery to and for use at bottle-your-own premises.
Non-duty-paid, in respect of packaged alcohol, means that duty, other than special duty, has not been paid on the alcohol.
- in respect of raw leaf tobacco or a tobacco product, packaged in a prescribed package, in accordance with the Stamping and Marking of Tobacco Products Regulations;
- in respect of alcohol,
- packaged in a container with a capacity of not more than 100 litres that is ordinarily sold to consumers without the alcohol being repackaged into smaller containers or
- packaged in a marked special container.
Personal use, in relation to the use of a good by an individual, means the use of the good by the individual, or by others at the individual’s expense, but does not include the sale or other commercial use of the good.
A restricted formulation is a product that is made with alcohol by a licensed user in accordance with a formula that has been approved by the CRA with the conditions that the formulation can only be used by a licensed user or be exported.
The specified premises of a licensed user are the premises specified by the CRA under paragraph 23(3)(a) as being those where the activities of the licensed user may be carried on.
Stamped, in respect of a tobacco product, means that an excise stamp, and all prescribed information in a prescribed format, are stamped, impressed, printed or marked on, indented into or affixed to the product or its container in the prescribed manner to indicate that duty, other than special duty, has been paid on the product.
A tobacco dealer is a person, other than a tobacco licensee, who engages in the buying and selling of raw leaf tobacco on which duty is not imposed under the Act.
Tobacco products means manufactured tobacco, packaged raw leaf tobacco and cigars.
Requirement for a licence
2. A person who wishes to undertake any activity involving alcohol or tobacco should carefully review the following information on licences issued under the Act and determine which licence or licences may be required in their particular circumstances.
3. Certain alcohol activities require a registration, rather than a licence. Excise Duty Memorandum EDM2-3-1, Registration Types lists and discusses alcohol registrations.
4. The Act provides several offence provisions related to performing specific alcohol or tobacco-related activities, possessing bulk or non-duty-paid packaged alcohol, or possessing unstamped tobacco products without the appropriate licences. Penalties can range from fines to imprisonment or both. Any person who is not sure if they require a licence should contact a regional excise duty office to discuss their situation with an officer. A listing of these offices is included in Excise Duty Memorandum EDM1-1-2, Regional Excise Duty Offices.
Licences specifically related to alcohol
5. The possession and use of bulk alcohol and non-duty-paid packaged alcohol are strictly controlled under the Act. Through a system of licences and registrations, the production, packaging and possession of bulk or non-duty-paid packaged alcohol are authorized and specific activities that are otherwise prohibited are allowed.
6. A spirits licence issued under paragraph 14(1)(a) authorizes the person (the spirits licensee) to produce or package spirits in Canada. Spirits licensees are permitted to possess bulk spirits only under paragraph 70(2)(a).
7. The production or packaging of spirits by persons who do not possess a spirits licence is prohibited, except in the following circumstances, as stipulated in subsection 60(2):
- the packaging of spirits from a marked special container by a purchaser at an authorized bottle‑your‑own premises; and
- the production of spirits for the purpose of the analysis of the composition of a product containing absolute ethyl alcohol or as a consequence of such analysis.
8. For more information on the production and packaging of spirits, see Excise Duty Memorandum EDM3-1-1, Producers and Packagers of Spirits.
9. A wine licence issued under paragraph 14(1)(b) authorizes the person (the wine licensee) to produce or package wine in Canada. Wine licensees are permitted to possess bulk wine only under paragraph 70(2)(b).
10. The production or packaging of wine by persons who do not possess a wine licence is prohibited, except in the following circumstances, as stated in subsection 62(2):
- the packaging of wine from a marked special container by a purchaser at an authorized bottle‑your‑own premises; or
- the production and packaging of wine by an individual for their personal use.
11. The second exception mentioned above allows individuals to produce and package wine in their home, or at a ferment‑on‑premises facility, for personal, non-commercial use.
12. For more information on the production and packaging of wine, see Excise Duty Memorandum EDM4-1-1, Producers and Packagers of Wine.
13. A user’s licence issued under paragraph 14(1)(c) authorizes the person (the licensed user) to use bulk alcohol, non‑duty-paid packaged alcohol or a restricted formulation.
14. A licensed user may use the alcohol in the following circumstances, as stated in sections 73 and 90:
- in an approved formulation
- in an approved process;
- to produce vinegar;
- to fortify wine (where the licensed user also holds a wine licence);
- to blend spirits and bulk wine where the finished product is spirits (where the licensed user also holds a spirits licence); or
- to produce spirits from bulk wine (where the licensed user also holds a spirits licence).
15. For more information on the rights and restrictions of a licensed user, see Excise Duty Memorandum EDM3-1-2, Licensed Users.
Licences specifically related to tobacco
16. A tobacco licence issued under paragraph 14(1)(d) authorizes the person (the tobacco licensee) to manufacture tobacco products. The manufacturing of tobacco products without a tobacco licence is prohibited under subsection 25(1). However, pursuant to subsection 25(3), an individual who is not a tobacco licensee may manufacture tobacco products:
- for their personal use, from packaged raw leaf tobacco or manufactured tobacco on which the duty has been paid; or
- from raw leaf tobacco grown on land on which the individual resides, for their personal use or for the personal use of family members that reside with the individual and are 18 years of age or older. The tobacco manufactured may not exceed 15 kilograms annually for the individual and each family member.
17. For more information on the manufacturing of tobacco products, see Excise Duty Memorandum EDM7-1-1, Manufacturers of Tobacco Products.
Tobacco dealer’s licence
18. A tobacco dealer’s licence issued under paragraph 14(1)(e) authorizes the person (the licensed tobacco dealer) to carry on the business of a tobacco dealer. By definition a tobacco dealer cannot be a tobacco licensee.
19. Paragraph 30(2)(a) allows a licensed tobacco dealer to dispose of, sell, offer to sell, purchase or have in their possession raw leaf tobacco that is not packaged and stamped. However, tobacco dealers are not permitted to kiln dry, cut, stem or otherwise manufacture or re-work raw leaf tobacco, or destroy raw leaf tobacco. Carrying on the activities of a tobacco dealer without the possession of a tobacco dealer’s licence is prohibited under section 26.
20. For more information on licensed tobacco dealers’ rights and restrictions, see Excise Duty Memorandum EDM7-1-2, Tobacco Dealers.
Special excise warehouse licence
21. A special excise warehouse licence issued under subsection 20(1) authorizes the person (the special excise warehouse licensee) to store and distribute unstamped tobacco products manufactured by a tobacco licensee that are intended for sale to accredited representatives. The special excise warehouse licensee must be authorized by the tobacco licensee who manufactured the product to be the only person, other than the tobacco licensee, to do so.
22. A person may not hold more than one special excise warehouse licence, as per subsection 20(2), and may not, under subsection 20(3), designate more than one premises as their special excise warehouse.
23. For more information on special excise warehouses, see Excise Duty Memorandum EDM8-1-2, Special Excise Warehouses.
Licence for duty free shop operators
24. Under section 22, a person who is licensed under the Customs Act to operate a duty free shop may obtain a licence to be authorized to possess and sell imported unstamped manufactured tobacco that is subject to special duty imposed under section 53. The special duty imposed on the imported manufactured tobacco is payable by the duty free shop operator at the time of delivery of the product.
25. For more information on licences under the Act for duty free shop operators, see Excise Duty Memorandum EDM7-1-4, Duty Free Shop Operators.
Excise warehouse licence
26. An excise warehouse licence issued under subsection 19(1) authorizes the person (the excise warehouse licensee) who is not a retailer of alcohol to possess in their excise warehouse non‑duty‑paid packaged alcohol or unstamped manufactured tobacco or cigars.
27. Under subsection 19(2), a person who is a retailer of alcohol may obtain an excise warehouse licence if that person is also
- a spirits or wine licensee;
- a liquor authority; or
- a person who supplies goods as ships’ stores in accordance with the Ships’ Stores Regulations.
28. When alcohol is packaged, excise duty is payable unless the packaged alcohol is immediately entered into an excise warehouse. Therefore, spirits and wine licensees may also apply for excise warehouse licences to defer the excise duty that would otherwise become payable when they package alcohol.
29. An excise warehouse licensee that is also a tobacco licensee may possess containers of unstamped manufactured tobacco and cigars that the tobacco licensee manufactured or imported into Canada.
30. An excise warehouse licensee that is not a tobacco licensee may possess unstamped manufactured tobacco and cigars that are imported. The excise warehouse licensee may also possess unstamped cigars that are manufactured in Canada and that are for delivery as ships’ stores in accordance with the Ships’ Stores Regulations.
31. For more information on excise warehouses, see Excise Duty Memorandum EDM8-1-1, Excise Warehouses.
Obtaining a licence under the Act
32. Instructions and requirements for obtaining any of the licences issued under the Act are provided in Excise Duty Memorandum EDM2-2-1, Obtaining and Renewing a Licence.
For all technical publications related to the Excise Act, 2001 and its regulations, go to Excise Act, 2001 – Technical Information.
To request a ruling or interpretation or make a technical enquiry on excise duty, contact one of the regional excise duty offices listed in Excise Duty Memorandum EDM1-1-2, Regional Excise Duty Offices.
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