EDN28 – Becoming a Prescribed Person under the New Tobacco Stamping Regime

From: Canada Revenue Agency

March 2011

The information in this notice does not replace the law found in the Excise Act, 2001 and its regulations and is provided for your reference and convenience only. As the information in this publication may not completely address your particular operation, you may wish to refer to the Act or its regulations, or you may contact the Excise Stamp Order Desk or your regional excise duty office for additional information. A list of all regional excise duty offices is available in Excise Duty Memorandum 1.1.2, Regional Excise Duty Offices, on the Canada Revenue Agency (CRA) Web site.

The purpose of this notice is to provide guidance on the manner in which to apply to be a prescribed person under the Excise Act, 2001 (Act) for purposes of purchasing, possessing and applying excise stamps on tobacco products. For information on how to become registered and how to order excise stamps, see Excise Duty Notice EDN 29, Tobacco Stamping Regime – Excise Stamp Order Process.

Background

On July 12, 2010, the Jobs and Economic Growth Act received Royal Assent. This act contains the legislative amendments to the Excise Act, 2001 required to implement the new stamping regime for tobacco products.

Some of the legislative amendments are summarized below:

  • the Minister of National Revenue has sole authority to authorize a stamp provider to supply excise stamps to persons approved by the CRA;
  • the possession of excise stamps is restricted to tobacco licensees and prescribed persons who import tobacco products into the duty-paid market;
  • tobacco licensees and prescribed persons must post security, prior to obtaining excise stamps, in an amount and form satisfactory to the Minister;
  • persons who are issued excise stamps must maintain proper records and account for those stamps.

In accordance with the legislative amendments to the Excise Act, 2001, the new excise stamp became available on September 1, 2010. Effective April 1, 2011, all tobacco products to be entered into the duty-paid market or to be released under the Customs Act for entry into the duty-paid market must be stamped with the new excise stamp. For a limited transition period following April 1, 2011, both the new excise stamps and/or the current tear-tape or paper stamps may appear on tobacco products that were entered into the duty-paid market prior to that date. Further, provincially marked tear tape may continue to be present on duty-paid tobacco products.

Prescribed persons

For purposes of the new tobacco stamping regime, there are two situations where a person may be designated or deemed to be a prescribed person, as follows:

  • A person who imports tobacco products destined for the Canadian duty-paid market and meets at all times, the requirements described in paragraphs 2(2)(a) through (e) of the Regulations Respecting Excise Licences and Registrations and who posts security in the amount and form satisfactory to the Minister may be designated to be a prescribed person. This prescribed person may purchase, possess and apply excise stamps.
  • A person who transports excise stamps on behalf of either a person who is a tobacco licensee, a prescribed person who imports tobacco products into the duty-paid market, or the CRA authorized stamp provider is deemed to be a prescribed person. This prescribed person may possess excise stamps only for purposes of transporting the excise stamps on behalf of, or to, the above parties.

How to become a prescribed person

Persons who import tobacco products

Importers of tobacco products destined for the Canadian duty-paid market who are not tobacco licensees under the Excise Act, 2001 and who want to become prescribed persons under the Act, must submit a letter to the Excise Stamp Order Desk, and:

  • formally request to be prescribed;
  • describe the intended operations to tobacco products, and their scope of activities;
  • list the locations where excise stamps are proposed to be shipped;
  • provide the address where records will be maintained to account for the excise stamps;
  • list the stamp denominations required;
  • list the type of tobacco products to be imported;
  • list the estimated volumes, broken down by package type, to be imported annually and that would be subject to excise duty; and
  • demonstrate how they meet the requirements as described in paragraphs 2(2)(a) through (e) of the Regulations Respecting Excise Licences and Registrations.

Note: Stamps will be ordered using an on-line ordering system. To access this on-line ordering system, all prescribed persons and tobacco licensees must submit a registration form to the CRA Excise Stamp Order Desk. For additional information on how to become registered and order excise stamps, see Excise Duty Notice EDN 29.

Persons who transport excise stamps

A person who transports excise stamps on behalf of:

  • a tobacco licensee,
  • an authorized stamp provider, or
  • a prescribed person who imports tobacco products destined for the duty-paid market will be deemed to be a prescribed person.

Deemed prescribed persons who transport stamps must maintain adequate documentation to demonstrate that they were, in fact, in possession of excise stamps and operating on behalf of the above named persons.

No fees

There are no application fees required to obtain a prescribed person designation under the Act.

Security requirements

Every tobacco licensee and prescribed person who imports tobacco products destined for the duty-paid market who wants to obtain excise stamps must post security in a form satisfactory to the Minister and in an amount determined by the CRA. More details on the security requirements may be found in the Regulations Amending the Stamping and Marking Regulations (2011) or from the Excise Stamp Order Desk.

Effect and duration

A prescribed person designation is effective from the date indicated in the notice of approval and it remains in effect until the person either requests to cancel his designation or no longer qualifies to be a prescribed person.

Changes to entity or operations

A prescribed person must report any of the changes listed below, in writing, to the CRA Excise Stamp Order Desk within a reasonable period of time before the change occurs:

  • change of name or legal entity;
  • the discontinuance of the operations covered by the designation;
  • a change of business address or the address where the books and records are maintained;
  • a change to any other information provided in their application to be a prescribed person.

In the case of a change of legal entity, a new prescribed person designation request will be required.

Where a request to be designated as a prescribed person is not approved

The decision to issue a prescribed person designation rests with the CRA. Approval of a designation request will not be granted if the person does not meet the eligibility requirements described in this notice.

Additional information

The Excise Stamp Order Desk can be reached at the following address and numbers:

Excise Stamp Order Desk
Canada Revenue Agency
Excise Duties and Taxes Division
Strategic Policy and Program Improvement Unit
320 Queen Street, Tower A, 20th Floor
Ottawa, ON  K1A 0L5

Telephone: 1-866-330-3304
Fax: 613-954-2226
Email: Tobacco.stamp@cra.gc.ca

All technical publications related to the Excise Act, 2001 and regulations are available on the CRA Web site at www.cra.gc.ca/exciseduty, under the title “Excise Act, 2001 – Technical Information”.

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