EDN49 Changes to Excise Duty Rates on Tobacco Products

From: Canada Revenue Agency

February 2018

The information in this notice 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 notice 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.

All legislative references in this publication are to the Excise Act, 2001 (the Act), unless otherwise specified.

Any commentary in this notice should not be taken as a statement by the CRA that the proposed amendments will be enacted in their current form.

On February 27, 2018, the Minister of Finance tabled Budget 2018 and an accompanying Notice of Ways and Means Motion proposing amendments to the Excise Act, 2001 to increase the rates of excise duty on tobacco products. These rates will take effect February 28, 2018.

The rates of excise duty on tobacco products are outlined below. The rates that are being amended appear in bold type.

Excise duty rates under sections 42 and 43.1, and Schedule 1

Excise duty rates on stamped tobacco products

Product Rate
Cigarettes $0.59634 per five cigarettes or fraction of five cigarettes contained in any package
Tobacco sticks $0.11927 per stick
Manufactured tobacco other than cigarettes and tobacco sticks $7.45425 per 50 grams or fraction of 50 grams contained in any package
Cigars $25.95832 per 1,000 cigars
Raw leaf tobacco $1.572 per kilogram

Additional duty on cigars under sections 43 and 43.1, and Schedule 2

The additional duty on cigars is the greater of

  1. $0.09331 per cigar, and
  2. 88%, computed on
    1. the sale price, in the case of cigars manufactured in Canada, or
    2. the duty-paid value, in the case of imported cigars.

Special duty rates on certain manufactured tobacco under sections 53, 54 and 56, and Schedule 3

Special duty on imported manufactured tobacco

Product Rate
Cigarettes $0.11927 per cigarette
Tobacco sticks $0.11927 per stick
Manufactured tobacco other than cigarettes and tobacco sticks $7.45425 per 50 grams or fraction of 50 grams contained in any package

Special duty on traveller's tobacco

Product Rate
Cigarettes $0.11927 per cigarette
Tobacco sticks $0.11927 per stick
Manufactured tobacco other than cigarettes and tobacco sticks $7.45425 per 50 grams or fraction of 50 grams contained in any package

Special duty on unstamped tobacco products

Product Rate
Cigarettes $0.11927 per cigarette
Tobacco sticks $0.11927 per stick
Tobacco products other than cigarettes and tobacco sticks $149.09 per kilogram

Special duty on stamped tobacco products

Product Rate
Cigarettes $0.095724 per cigarette
Tobacco sticks $0.095724 per stick
Tobacco products other than cigarettes and tobacco sticks $5.98275 per 50 grams or fraction of 50 grams contained in any package

Effective date

The rates detailed above apply effective February 28, 2018. The CRA will collect the increased duty, paid on a voluntary basis, until such time as the amendments become law (i.e., Royal Assent). Importers and licensees that do not pay the duty in accordance with the new rates as of the date cited above will be required to pay interest on unpaid amounts once Royal Assent is received.

Annual adjustments

The Notice of Ways and Means Motion also proposes to amend the Excise Act, 2001 to adjust the excise duty rates on tobacco products annually. The rates will be indexed to the Consumer Price Index with the first inflationary rate adjustment effective April 1, 2019. The CRA will publish the adjusted rates each year, well in advance of April 1.

Further information

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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