EDN74 Cigarette Inventory Tax on April 1, 2022
This notice provides information on the cigarette inventory tax that is imposed on duty-paid and special duty-paid cigarettes held in inventory at 12:01 am on April 1, 2022.
Except as otherwise noted, all statutory references in this publication are to the provisions of the Excise Act, 2001. The information in this publication does not replace the law found in the Act and its regulations.
If this information does not completely address your particular situation, you may wish to refer to the Act or relevant regulation, or contact any Canada Revenue Agency (CRA) regional excise office for additional information. These offices are listed at Contact Information – Excise Duties, Excise Taxes, Fuel Charge and Air Travellers Security Charge.
Under subsection 43.1(2), the rates of excise duty on tobacco products are adjusted annually every April 1 based on changes to the Consumer Price Index. In addition, under subsection 58.2(2), a cigarette inventory tax applies to the following cigarettes that are held in inventory at 12:01 am on April 1 of each year:
- duty-paid cigarettes (that is, cigarettes on which the excise duty has been paid, as indicated by Duty Paid Canada Droit Acquitté on the affixed tobacco excise stamp)
- imported unstamped cigarettes on which special duty was paid by a duty-free shop
Cigarette includes any roll or tubular construction intended for smoking, other than a cigar or a tobacco stick.
The cigarette inventory tax for April 1, 2022, is $0.00349 per cigarette ($0.698 per carton of 200 cigarettes).
The cigarette inventory tax is calculated on duty-paid and special duty-paid cigarettes held in inventory at 12:01 am on April 1, 2022. All persons that own cigarettes that will be for sale in the ordinary course of their business must determine their inventory of cigarettes at that time in order to calculate the amount of cigarette inventory tax payable.
Inventories must be determined in a fair and reasonable manner. This may include a physical count and must be supported by appropriate books and records.
Reporting and paying the cigarette inventory tax
All persons that are liable to report and pay the cigarette inventory tax must file the 2022 version of Form B273, Excise Return – Cigarette Inventory Tax, and submit the payment no later than May 31, 2022.
GST/HST registrants that elected to file returns as separate branches or divisions may also file a separate Form B273 for each branch or division.
Exemption for small retail inventory
Persons that hold 30,000 cigarettes or less at a separate retail establishment are not liable to report or pay the cigarette inventory tax. Separate retail establishment means a shop or store of a person that satisfies all of the following conditions:
- it is geographically separate from other places of business of the person
- it is where the person regularly sells cigarettes to consumers attending the shop or store
- it is a retail establishment for which separate records are maintained (the records do not need to be physically kept on site at the shop or store)
30,000 cigarettes equates to 150 cartons of 200 cigarettes per carton.
Section 87 of the Indian Act provides that the personal property of an IndianFootnote 1 or an Indian band situated on a reserve is exempt from tax. If an Indian individual, a partnership of Indian individuals, or an Indian band owns cigarettes that are situated on a reserve, they are not required to pay the cigarette inventory tax.
However, if the owner of the cigarettes is a corporation situated on a reserve, the tax exemption does not apply and the cigarette inventory tax is payable.
For all technical publications related to the Excise Act, 2001 and its regulations, go to Excise duties technical information under the Excise Act, 2001.
To make a general or technical enquiry on excise duties or request a ruling or interpretation related to excise duties, go to Contact Information – Excise Duties, Excise Taxes, Fuel Charge and Air Travellers Security Charge.
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