8.1.2 Special Excise Warehouses
NOTE: This version replaces the one dated June 2003.
This memorandum provides an overview of the obligations and entitlements of persons who may become special excise warehouse licensees under the Excise Act, 2001 (the "Act").
The information in this memorandum does not replace the law found in the Act and its regulations. It is provided for your reference. As it may not completely address your situation, you may wish to refer to the Act or its regulations, or contact any Canada Revenue Agency 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
- Definitions and general information
- Special excise warehouse licence
- Restrictions for a special excise warehouse licensee
- Sale and removal of manufactured tobacco or cigars
- Revocation of an authorization to be a sole distributor
- Maintaining records
- Returns and payments
- Debts and the collections process
Definitions and general information
1. The following terms are used in this memorandum, as per section 2 Footnote 1:
An accredited representative is a representative of a foreign country who is entitled to certain tax exemptions under the Foreign Missions and International Organizations Act as specified in Article 34 of the Convention set out in Schedule I of that Act, or in Article 49 of the Convention set out in Schedule II of that Act. Such persons include, but are not limited to, foreign diplomats and consular officials.
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.
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 special excise warehouse licensee means a person who holds a special excise warehouse licence issued under section 20.
2. As per paragraph 32(2)(h), in order for an accredited representative to possess unstamped manufactured tobacco or cigars free of excise duty under the provisions of the Act, the products must be for their personal or official use.
Special excise warehouse licence
3. Under section 20, a special excise warehouse licence may be issued to a person who is authorized by a tobacco licensee to be the only person, other than the tobacco licensee, entitled to distribute to an accredited representative manufactured tobacco or cigars manufactured by the tobacco licensee.
4. Only one special excise warehouse licence will be granted to the same person.
5. The special excise warehouse licence will apply only to the person indicated in the licence application. Only one premises may be designated as a special excise warehouse of the special excise warehouse licensee.
6. Under paragraph 32(2)(c), a special excise warehouse licence allows its licensee to store, on designated premises, domestically produced unstamped manufactured tobacco or cigars that they are authorized to distribute in accordance with their licence.
7. Instructions and requirements for obtaining a special excise warehouse licence are provided in Excise Duty Memorandum EDM2.2.1, Obtaining and Renewing a Licence.
Restrictions for a special excise warehouse licensee
8. Section 52 states that a special excise warehouse licensee may store manufactured tobacco or cigars manufactured in Canada in their special excise warehouse only for the purpose of sale and distribution to accredited representatives for their personal or official use.
Sale and removal of manufactured tobacco or cigars
9. Under paragraph 32(3)(c), a special excise warehouse licensee may sell or offer to sell unstamped manufactured tobacco or cigars to an accredited representative for their personal or official use, if the product is one that the licensee is permitted under the Act to distribute.
10. Subsection 50(11) states that a special excise warehouse licensee may remove from its warehouse manufactured tobacco and cigars manufactured in Canada for delivery to an accredited representative for their personal or official use, if the licensee is permitted under the Act to distribute the tobacco or cigars.
11. Other than to return the manufactured tobacco or cigars to the excise warehouse of the tobacco licensee who manufactured them, the removal of manufactured tobacco or cigars for delivery to accredited representatives is the only authorized purpose for which they may be removed from a special excise warehouse.
Revocation of an authorization to be a sole distributor
12. Under subsection 21(1), if the authorization granted by a tobacco licensee to a special excise warehouse licensee to be the sole distributor of their manufactured tobacco or cigars to accredited representatives is rescinded or revoked, the special excise warehouse licensee must immediately return all of the tobacco licensee’s manufactured tobacco or cigars stored in the special excise warehouse to the tobacco licensee’s excise warehouse.
13. The tobacco licensee must immediately notify the CRA in writing that the special warehouse licensee has ceased to be the sole distributor to accredited representatives of the tobacco licensee’s manufactured tobacco or cigars.
14. Subsection 21(2) states that, in cases where a person is no longer authorized to be the sole distributor of a tobacco licensee’s products to accredited representatives, the CRA will cancel the special excise warehouse licence of the person, unless that person is authorized by another tobacco licensee to distribute that licensee’s manufactured tobacco or cigars to accredited representatives.
15. Under subsection 206(1), every person who possesses a licence under the Act is required to maintain all records that are necessary to determine whether they are in compliance with the Act.
16. Additional information on the requirement to maintain books and records is available in Excise Duty Memorandum EDM9.1.1, General Requirements for Books and Records.
Returns and payments
17. Under subsection 160(1), every special excise warehouse licensee is required to file Form B264, Excise Duty Return – Special Excise Warehouse Licensee, in respect of each fiscal month, and to calculate and remit any excise duty payable on that return.
18. As per subsection 159(1), where a licensee has determined a fiscal month for GST/HST purposes, the same fiscal month applies for purposes of excise duty. Where such a fiscal month has not yet been determined, a person may choose a fiscal month using established GST/HST rules, or use a calendar month. In this case, the licensee must notify the CRA of their fiscal months using Form B268, Notification of Fiscal Months . This form will be provided to the licensee at the time a licence is issued under the Act, and must be signed by an authorized individual.
19. Additional information with respect to the filing of monthly returns, remitting excise duty, and paying the correct amounts of excise duty is available in Excise Duty Memorandum EDM10.1.1, Returns and Payments. Information relating to the amounts to be included on the excise duty return is available in Excise Duty Memorandum EDM10.1.5, Completing an Excise Duty Return – Special Excise Warehouse Licensees.
Debts and the collections process
20. As per subsection 284(1.1), excise duty and other amounts payable under the Act are debts due to the Crown and may be recovered through the court process or in any other manner provided under the Act.
21. A special excise warehouse licensee who is late filing returns may receive a notice or a telephone call from a CRA official as a reminder of their obligation to file outstanding returns.
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