EDN106 Cigarette inventory tax on April 1, 2026

Excise Duty Notice

February 2026

Except as otherwise noted, all statutory references in this notice are to the provisions of the Excise Act, 2001. The information in this notice does not replace the law found in the Act and its regulations.

If this information does not completely address your situation, refer to the Act or regulations or contact your regional excise office for additional information. The offices are listed at Contact information – Excise and Specialty Tax Directorate. 

On this page

• General information
• Determining inventories
  • Exemption for small retail inventory
• First Nations
• Reporting and paying the cigarette inventory tax
• Separate branches or divisions

General information

An annual cigarette inventory tax applies to cigarettes held in inventory at 12:01 am on April 1. If you own cigarettes that will be for sale in the ordinary course of your business, you must determine your inventory of cigarettes at the beginning of the day on April 1, 2026, in order to calculate the amount of cigarette inventory tax payable.

The cigarette inventory tax for April 1, 2026, is $0.00382 per cigarette ($0.76400 per carton of 200 cigarettes). It applies to:

• duty-paid cigarettes (that is, cigarettes on which 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.

Determining inventories

The cigarette inventory tax is calculated on duty-paid and special-duty-paid cigarettes held in inventory at 12:01 am on April 1, 2026.

If you own cigarettes that will be for sale in the ordinary course of your business and you are an individual, a partnership, a corporation, a trust, the estate of a deceased individual, a government, or a body that is a society, a union, a club, an association, a commission, or another organization of any kind, you must determine your inventory of cigarettes at the beginning of the day on April 1, 2026, 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 records.

Exemption for small retail inventory

A separate retail establishment holding 30,000 or fewer cigarettes is not required to report or pay the cigarette inventory tax. Separate retail establishment means a shop or store:

• that is geographically separate from your other places of business
• at which you regularly sell cigarettes to consumers attending the shop or store
• for which separate records are maintained (the records do not need to be physically kept on site at the shop or store)

First Nations

Section 87 of the Indian Act provides a tax exemption for the personal property of an Indian^{Footnote 1} or an Indian band situated on a reserve. Indian individuals, partnerships of Indian individuals, and Indian bands owning cigarettes located on a reserve are not required to pay the cigarette inventory tax. However, if a corporation owns cigarettes situated on a reserve, the tax exemption does not apply and the cigarette inventory tax is payable.

Reporting and paying the cigarette inventory tax

If you are liable to report and pay the cigarette inventory tax on April 1, 2026, you must file Form B273, Excise Return – Cigarette Inventory Tax, and submit your payment no later than May 31, 2026.

You can file Form B273 and make a payment through My Business Account in your Canada Revenue Agency (CRA) account. This provides immediate confirmation that your return or payment has been received by the CRA. To register for a CRA account to access My Business Account, go to Sign in to your CRA account.

To file Form B273 online, sign in to your CRA account to access My Business Account, go to your excise duty account, and click on "File a return". Select "B273 Excise Return – Cigarette Inventory Tax", then enter the quantities of cartons and packages of cigarettes in your inventory as instructed. The CRA will automatically calculate the total number of cigarettes in your inventory and the amount of cigarette inventory tax payable.

If you choose to file Form B273 on paper:

• enter 2026 in box 2, "Reporting period"
• enter 2026 in box 3, "Due date"
• enter $0.00382 in the "Tax rate (per cigarette)" column of the table under "6. Tax calculation"
• follow the instructions on page 2 to complete the rest of the information required
• mail your completed Form B273 to the address indicated on the form

Separate branches or divisions

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.

Further information