EDN50 Cigarette Inventory Tax

From: Canada Revenue Agency

February 2018

On February 27, 2018, the Minister of Finance announced proposed amendments to the Excise Act, 2001 to impose a tax on cigarettes held in inventory at 12:01 a.m. on February 28, 2018. This notice provides additional information on this proposed amendment. 

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.

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.

Following the announcement in Budget 2018, an inventory tax will apply to duty-paid and special duty‑paid cigarettes that are held in inventory at 12:01 a.m. on February 28, 2018.

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, 2018. Inventory must be determined in a fair and reasonable manner as supported by appropriate books and records.

Note that 30,000 cigarettes equates to 150 cartons (200 cigarettes per carton).

The cigarette inventory tax is $0.011468 per cigarette ($2.2936 per carton of 200 cigarettes).

Certain retailers who do not hold more than 30,000 cigarettes in a separate retail establishment are exempt from having to file Form B273, and are not liable for the cigarette inventory tax.

The completed Form B273 and payment are both due on or before April 30, 2018.

For more information on this proposed inventory tax, please refer to Excise Duty Notice EDN51, Questions and Answers on the Cigarette Inventory Tax, or contact any CRA regional excise duty office.

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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