Repeal of Excise Duty Exemption for 100% Canadian Wine
Excise Duty Notice EDN75
Some of the information in this notice does not apply to 100% Canadian wine made from honey or apples, which is not subject to excise duty. For information about this exemption, refer to Excise Duty Notice EDN77, Excise Duty Exemption for 100% Canadian Wine Made from Honey or Apples.
The purpose of this notice is to provide information on the repeal of the excise duty exemption for 100% Canadian wine as a result of a proposed amendment to the Excise Act, 2001 announced in Budget 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 - Canada.ca.
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 April 7, 2022, the Minister of Finance tabled Budget 2022 and announced proposed amendments to the Excise Act, 2001 to repeal the excise duty exemption under paragraph 135(2)(a) for wine that is produced in Canada and composed wholly of agricultural or plant product grown in Canada (100% Canadian wine). The proposed amendments are included in Bill C-19, Budget Implementation Act, 2022, No. 1, which was tabled in Parliament on April 28, 2022. The proposed measure would come into force on June 30, 2022.
Imposition of excise duty
Excise duty is generally imposed on wine packaged in Canada. Wine is defined in section 2 and includes cider, wine coolers, fruit wines and sake. Excise duty is payable at the time of packaging by the responsible wine licensee unless the wine is immediately entered into an excise warehouse after packaging or relieved of duty.
The Act currently exempts 100% Canadian wine from excise duty. Budget 2022 proposed to repeal this exemption. Therefore, 100% Canadian wine packaged on or after June 30, 2022, would be subject to excise duty unless a different exemption applies.
Rates of excise duty
Rates of excise duty on wine are per litre of wine and vary based on alcohol content.
The rates are adjusted annually every April 1 based on changes to the Consumer Price Index. For a listing of current and historical rates of excise duty on wine, go to Excise Duty Rates.
Warehousing packaged inventories
A wine licensee is not permitted to possess non-duty-paid packaged wine. If a wine licensee wishes to store packaged wine and defer the payment of excise duty, the wine licensee must hold an excise warehouse licence and enter the wine into the excise warehouse immediately after packaging.
The liability for excise duty on the wine transfers from the wine licensee to the excise warehouse licensee at the time the wine is entered into the warehouse. Excise duty is paid by the excise warehouse licensee when the wine is removed from the excise warehouse for entry into the duty-paid market. The applicable rate is the rate in effect at the time the duty is payable. If the rate is adjusted between the time the wine is packaged and entered into an excise warehouse and the time it is removed from an excise warehouse, the adjusted rate applies.
Because there is no duty to defer, 100% Canadian wine packaged prior to June 30, 2022, cannot be entered into an excise warehouse.
Instructions and requirements for obtaining an excise warehouse licence are provided in Excise Duty Memorandum EDM2-2-1, Obtaining and Renewing a Licence. For additional information on excise warehousing, refer to Excise Duty Memorandum EDM8-1-1, Excise Warehouses.
Filing returns, reporting periods and maintaining records
Filing returns and reporting periods
All wine licensees are required to file Form B265, Excise Duty Return – Wine Licensee, and all excise warehouse licensees are required to file Form B262, Excise Duty Return – Excise Warehouse Licensee, for each reporting period. All licensees must also calculate any excise duty payable on their return and pay any amount owing. Returns must be filed for each reporting period even if there is no activity or no excise duty payable. The return and payment are due no later than the last day of the first month that follows the reporting period.
Although the reporting period of a wine licensee or an excise warehouse licensee that does not hold tobacco or cigars is generally a fiscal month, a licensee may apply to the CRA to have a reporting period that is a fiscal half-year instead of a fiscal month. For information on applying and qualifying for a fiscal half-year reporting period, refer to Excise Duty Notice EDN40, Semi-Annual Reporting Period for Certain Licensees.
All licensees are required to maintain adequate books and records to demonstrate that they have complied with the Act.
The qualifying 100% Canadian wine inventory must be recorded separately from the duty-deferred inventory kept in an excise warehouse. The wine licensee responsible for claiming the excise duty exemption for 100% Canadian wine must maintain adequate books and records to support the exemption claim on all inventories that were packaged prior to June 30, 2022.
For information on the requirement to maintain books and records, refer to Excise Duty Memorandum EDM9-1-1, General Requirements for Books and Records.
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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