EDM2-2-1 Obtaining and renewing a licence

Excise Duty Memorandum

March 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 to be licensed
• Licensing conditions
• How to apply for a licence
• Security requirements
• Eligibility for a licence
• Other requirements
• Effect and duration of licence
• Licence renewal
• Notification of changes
• Facilities, personnel and equipment
• Refusal to issue a licence
• Cancellation or suspension of a licence

Requirement to be licensed

Is licensing required?

1. Every person who possesses, supplies, receives, buys, sells, uses, imports, exports, or performs any other activity involving tobacco or alcohol should ensure that they are in compliance with any restrictions that may be imposed on that activity under the Act. The Act imposes restrictions on several tobacco and alcohol-related activities and, in many cases, a person may only be permitted to undertake these activities if they possess the appropriate licence issued by the Canada Revenue Agency (CRA).

2. A listing of all licences provided for under the Act is available in Memorandum EDM 2-1-1, Licence types. Readers are encouraged to refer to this memorandum to determine if a licence is required in their particular circumstances.

Licensing conditions

Specified activities

3. Each licence issued under the Act relates to specified activities and authorizes a person to perform only those activities specifically provided for by that licence. There are no licences that allow a person to perform all activities regulated under the Act.

Compliance with the Act (s 24)

4. Licensees are required to carry on all activities authorized under their licences in compliance with the Act and its Regulations.

Conditions imposed by the CRA (ss 23(3))

5. The CRA has the authority to specify the activities that may be carried out under a licence and the premises where these activities may be carried out, as well as to impose any conditions on these activities that are considered appropriate in the circumstances.

How to apply for a licence

Regulations Respecting Excise Licences and Registrations (s 2)

6. Every person who wishes to obtain a licence under the Act must submit a completed Form L63A, Application for an Alcohol Licence or Registration, Form L63T, Application for a Tobacco Licence, a Tobacco Dealer Licence, or a Duty Free Shop Licence, or Form L63W, Application for an Excise Warehouse Licence or a Special Excise Warehouse Licence, to their regional excise office. The offices are listed at Contact information – Excise and Specialty Tax Directorate.

Signatures

7. An authorized individual of the person must sign the completed application form. If the person is a corporation or an association or organization that has duly elected or appointed officers, the president, vice-president, secretary or treasurer (or other equivalent officers) of the organization are deemed to be so duly authorized. A proprietor or a partner must sign applications submitted by a sole proprietorship or partnership, respectively.

List of premises (Regulations ss 2(1))

8. A licence issued under the Act authorizes a person to carry on the specific activities provided for under that licence. The licensee may carry on those activities at a single location, or at several locations as authorized by the CRA. Accordingly, all applications for a licence must be accompanied by a list of the premises that the person wishes the CRA to designate for the purposes of the licence.

No fees

9. There are no application fees or other costs involved in obtaining a licence under the Act.

Security requirements

Security required for licence applications (para 23(3)(b))

10. Every person who submits an application for a spirits licence or tobacco licence must also submit security in a form and amount acceptable to the CRA. A person applying for any other licence under the Act is not required to provide security.

11. Additional information on the amount of security required and the acceptable forms of security is available in Memorandum EDM2-2-2, Financial security requirement for producers or packagers of spirits, manufacturers of tobacco products and prescribed persons that import tobacco products.

Eligibility for a licence

Specific criteria

12. A person must meet specific eligibility criteria to obtain a licence under the Act.

Individuals (Regulations para 2(2)(c))

13. A licence may be issued to an individual only if that individual:

• is at least 18 years of age; and
• has sufficient financial resources to conduct the business in a responsible manner.

Partnerships composed of individuals (Regulations subpara 2(2)(d)(i))

14. A licence may be issued to a partnership or unincorporated body composed of individuals if the partnership or unincorporated body:

• is composed of individuals each of whom is at least 18 years of age; and
• has sufficient financial resources to conduct its business in a responsible manner.

Partnerships composed of corporations (Regulations subpara 2(2)(d)(ii))

15. A licence may be issued to a partnership or unincorporated body composed only of corporations if each of the corporations has sufficient financial resources to conduct its business in a responsible manner.

Partnerships composed of individuals and corporations (Regulations subpara 2(2)(d)(iii))

16. A licence may be issued to a partnership or unincorporated body composed of individuals and corporations if:

• with respect to the individuals, each of them is at least 18 years of age; and
• with respect to the partnership or unincorporated body and the corporations, each of them has sufficient financial resources to conduct its business in a responsible manner.

Corporations (Regulations para 2(2)(e))

17. A licence may be issued to a corporation if the corporation has sufficient financial resources to conduct its business in a responsible manner.

Other requirements

Regulations para 2(2)(a) and (b)

18. In addition to the age and financial ability requirements, a licence will only be issued if the person:

• is not the subject of a receivership in respect of their debts;
• has not failed in the past five years to comply with any Act of Parliament (other than the Excise Act, 2001) or of a provincial legislature that deals with the taxation or control of tobacco or alcohol or any regulations made under it; and
• has not acted to defraud His Majesty in the past five years.

Regulations ss 2(3) and 2(4)

19. A person applying for an excise warehouse licence must also provide evidence, where the province in which the warehouse is located has enacted legislation respecting the warehousing of packaged alcohol, that the person has been authorized by that province, or the province's liquor authority, to warehouse alcohol on the premises. This does not apply to alcohol licensees that are producing or packaging alcohol in the province where the warehouse is located.

s 22, Regulations ss 2(5)

20. A person applying for a licence to possess and sell imported manufactured tobacco that is subject to special duty under the Act must submit evidence that the person has a licence issued by the CRA under the Customs Act to operate a duty free shop.

Effect and duration of licence

Regulations s 4

21. A licence is effective from the date indicated on the licence approval notice and remains in effect until the expiry date shown on that notice.

22. At a maximum, licences will be valid for two years from the effective date.

Licence renewal

ss 23(2), Regulations s 9

23. A person who wishes to renew their licence must submit, at least 30 days before the expiry date, a completed Form L63A, Form L63T, or Form L63W to their regional excise office. The person should indicate in the appropriate box on the form that the application relates to the renewal of an existing licence.

24. A licence will be renewed if the person submits an application for renewal within the specified time and, in the opinion of the CRA, no grounds exist to cancel or suspend the licence.

Notification of changes

Changes that must be reported (Regulations s 6)

25. A licensee must notify their regional excise office in writing of any changes to their information without delay. Such changes may include:

• a change of name or legal entity;
• the discontinuance of the operations covered by the licence;
• a change in the list of locations;
• a change in activities;
• a change in any other information provided on, or in support of, the licence application, including officers and directors; or
• a change to the address where the records are kept.

Name change

26. In the case of a name change, a licensee must notify their regional excise office in writing before the change occurs or as soon as possible after the change. No new licence or excise duty program account number (for example, 12345 6789 RD 0001) will be issued.

Change of legal entity

27. Where a change of legal entity occurs (for example, a proprietorship incorporates), the existing licence will be cancelled and the new legal entity will have to apply for a new licence by completing Form L63A, Form L63T, or Form L63W and submitting it to their regional excise office. If the new legal entity is applying for a spirits licence or a tobacco licence, it must also submit replacement security in an acceptable form and amount.

28. In cases where a corporation merges or amalgamates with another corporation, a new licence may not be required. However, the CRA must be notified of the change and the certificate of amalgamation must be provided.

Facilities, personnel and equipment

Regulations s 13

29. As a condition of holding a licence under the Act, all licensees must provide, at each premises designated in the licence:

1. adequate space for the examination of goods or records by an officer;
2. the personnel and equipment necessary to ensure that the goods or records can be examined by an officer; and
3. the personnel necessary to provide information to an officer, for audit purposes, with respect to the operations, inventory system and records of the person.

Refusal to issue a licence

CRA discretion (ss 23(1))

30. The decision to issue a licence rests with the CRA. The CRA may refuse to approve an application if it is not in the best interests of the public to do so.

Cancellation or suspension of a licence

ss 23(2)

31. The CRA has the authority to suspend or cancel a licence in certain circumstances.

Suspension (Regulations ss 10(1))

32. The CRA may suspend a licence if, at any time, the person to whom the licence has been issued:

• fails to notify the CRA of any changes to their licensing information as required in paragraphs 25 through 28 of this memorandum, or to provide adequate facilities, personnel or equipment as required in paragraph 29 of this memorandum; or
• fails to meet any of the conditions of the licence.

Cancellation (Regulations ss 12(1))

33. The CRA may cancel a licence, if, at any time, the person to whom the licence has been issued:

• requests in writing that the licence be cancelled;
• becomes bankrupt;
• no longer meets the eligibility requirements to possess the licence;
• ceases to carry on the business or activities for which the licence was issued;
• is the subject of a receivership in respect of their debts;
• fails to comply with any Act of Parliament (other than the Excise Act, 2001) or of a provincial legislature that deals with the taxation or control of tobacco or alcohol or of any regulations under it; or
• acts to defraud His Majesty.

Notice of suspension (Regulations ss 10(2))

34. If the CRA suspends a person's licence, a written notice will immediately be sent to the person confirming the suspension and providing the grounds for the suspension.

Recourse (Regulations ss 10(3))

35. A person who has received notice that their licence has been suspended may, within 90 days from the date of suspension, provide information or make representations to the CRA regarding why the licence should be reinstated.

Reinstatement (Regulations s 11)

36. When the CRA is satisfied that the grounds for the suspension of a licence no longer exist, the licence will be reinstated.

Notice of cancellation (Regulations ss 12(2))

37. Before cancelling a licence (unless doing so at the request of the licensee), the CRA will provide the person 90 days' notice of the proposed cancellation, along with all relevant information concerning the grounds for the proposed action.

Recourse (Regulations ss 12(3))

38. A person who has received notice of the proposed cancellation of a licence may, within 90 days from the date of the notice, make representations to the CRA regarding why the licence should not be cancelled.

Further information