EDN36 Cigarette Inventory Tax
On February 11, 2014, the Government of Canada announced in its Budget that it proposes to amend the Excise Act, 2001, by imposing a tax on cigarettes held in inventory at 12:01 a.m. on February 12, 2014.
This notice provides additional information on this proposed amendment. Any commentary in this notice should not be taken as a statement by the Canada Revenue Agency that these amendments will be enacted in their current form.
Following the announcement in Budget 2014, an inventory tax will apply to cigarettes that display the "Duty Paid Canada Droit Acquitté" stamp and that are held in inventory at 12:01 a.m. on February 12, 2014.
All persons who own cigarettes to be offered for sale must determine their inventories, and those with more than 30,000 cigarettes are required to complete and file Form B273, Excise Return – Cigarette Inventory Tax, on or before April 30, 2014. Inventory must be determined in a fair and reasonable manner as supported by appropriate books and records.
30,000 cigarettes equates to 150 cartons (200 cigarettes per carton).
The cigarette inventory tax is $0.02015 per cigarette ($4.03 per carton of 200 cigarettes).
Certain retailers who do not hold more than 30,000 cigarettes in a separate retail establishment are exempt of the requirement to file Form B273, and are not liable for the cigarette inventory tax.
The Canada Revenue Agency (CRA) will mail an information package and the excise return form to persons identified as possibly having cigarettes for sale. When the package is mailed out, a notice will be posted on the CRA website to that effect. If you receive this package but do not have cigarettes for sale, please disregard the package.
If you do not receive the information package or the form, you may contact any CRA regional excise duty office to obtain a copy. All regional excise duty offices are listed in Excise Duty Memorandum EDM1.1.2, Regional Excise Duty Offices, on the CRA website at www.cra-arc.gc.ca/E/pub/em/edm1-1-2/README.html.
The completed Form B273, Excise Return – Cigarette Inventory Tax, and payment are both due on or before April 30, 2014.
For more information on this proposed inventory tax, please refer to Excise Duty Notice EDN37, Questions and Answers on the Cigarette Inventory Tax, or contact any CRA regional excise duty office.
All technical publications related to the Excise Act, 2001 and its regulations are available on the CRA website at www.cra.gc.ca/exciseduty, under the title "Excise Act, 2001 – Technical Information".
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