Excise Duty Exemption for 100% Canadian Wine Made from Honey or Apples
Excise Duty Notice EDN77
The purpose of this notice is to provide information on the excise duty exemption for 100% Canadian wine made from honey or apples.
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 refer to the Act or relevant regulation, or contact your Canada Revenue Agency (CRA) regional excise office for additional information. The offices are listed at Contact Information – Excise Duties, Excise Taxes, Fuel Charge and Air Travellers Security Charge.
Budget Implementation Act, 2022, No. 1 amended the Excise Act, 2001 to exempt from excise duty wine that is produced in Canada from honey or apples and composed wholly of agricultural or plant product grown in Canada and that is packaged on or after June 30, 2022.
Exemption for 100% Canadian wine made from honey or apples
Wine is produced by fermentation of agricultural or plant products, excluding any grains or grain-based products.
Wine produced in Canada by fermentation of honey or apples (for example, certain honey wine, mead and cider) is exempt from excise duty provided that:
- the honey and apples have been produced in Canada, and
- all raw materials present during fermentation have been grown in Canada
If apple juice or concentrate is fermented, the apples used to make the juice or concentrate must have been grown in Canada.
The addition of fruits or berries other than apples during the fermentation process disqualifies the wine from the exemption. The addition of juice or concentrate made from fruits or berries other than apples during the fermentation process also disqualifies the wine from the exemption.
The addition of grains during the fermentation process results in a beverage classified as beer under the Excise Act.
Sugar and yeast are not required to be made wholly from Canadian-grown agricultural or plant product. However, the addition of grain-based sugar during the fermentation process results in a beverage classified as beer under the Excise Act.
When determining the eligibility of a wine for the exemption, the origin of ingredients added to the wine after fermentation is not generally considered. However, any additional wine added must also qualify for the exemption, and any spirits added to fortify the wine or beer blended with the wine must have been made in Canada wholly from agricultural or plant products grown in Canada.
Warehousing exempt wine
A wine licensee may store packaged exempt wine on their premises. The wine licensee must maintain separate records for exempt and duty-paid inventories.
An excise warehouse licensee may also store packaged exempt wine on their premises. The excise warehouse licensee must maintain separate records for exempt and duty-deferred inventories.
A wine licensee must report quantities of packaged exempt wine on Form B265, Excise Duty Return – Wine Licensee. For instructions on how to complete Form B265, refer to Excise Duty Memorandum EDM10-1-6, Completing an Excise Duty Return – Wine Licensee.
An excise warehouse licensee must not report quantities of packaged exempt wine on their excise duty return (Form B262, Excise Duty Return – Excise Warehouse Licensee) because there is no duty to defer.
Wine licensees and excise warehouse licensees must file a return for each reporting period even if there is no activity or no excise duty payable. The return is due no later than the last day of the first month that follows the reporting period.
All licensees are required to maintain adequate books and records to demonstrate that they have complied with the Act.
The inventory of exempt 100% Canadian wine made from honey or apples must be recorded separately from duty-paid or duty-deferred inventory kept at a licensee’s premises.
A wine licensee claiming the excise duty exemption for 100% Canadian wine made from honey or apples must maintain adequate books and records to support their claim. Records must be sufficient to identify the sources of raw materials used to produce the wine. Where records are insufficient to verify the eligibility of the exemption for 100% Canadian wine made from honey or apples, excise duty will be assessed.
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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