On October 30, 2007, the Government of Canada announced in its Economic Statement that it proposes to amend the Excise Act, 2001, by imposing a tax on certain excise duty-paid tobacco products held in inventory at the beginning of the day on January 1, 2008.
This notice provides additional information on this proposed amendment. Any commentary in this notice should not be taken as a statement by the Canada Revenue Agency that these amendments will be enacted in their current form.
For purposes of simplicity and consistency, the CRA will be following the same approach used in implementing the previous tobacco products inventory tax in 2006.
Following the announcement in the Economic Statement on October 30, 2007, it is proposed that a tax will apply to tobacco products held in inventory at the beginning of the day on January 1, 2008 and that display “Canada Duty Paid Droit Acquitté Canada” on the tear tape or stamp.
On January 1, 2008, all persons who own tobacco products to be offered for sale must determine their inventories, and those with more than 30,000 units are required to complete and file form B273, Excise Return – Tobacco Products Inventory Tax on or before February 29, 2008. Inventory must be determined in a fair and reasonable manner as supported by appropriate books and records.
Certain retailers who do not hold more than 30,000 units of these tobacco products in a separate retail establishment are exempt of the requirement to file form B273, and are not liable for the tobacco products inventory tax. A unit means one cigarette, one tobacco stick, one gram of loose tobacco for making cigarettes, or one cigar. For example, if an inventory were made up entirely of cigarettes, the above unit threshold would be 150 cartons. In addition, the tax will not apply to tobacco products held in vending machines.
The Canada Revenue Agency (CRA) will mail an information package and the excise return form to persons identified as possibly having tobacco products for sale. If you receive this package but do not have tobacco products for sale, please disregard the package.
If you do not receive the information package or the form, you may contact any CRA regional excise duty office to obtain a copy. A list of all regional excise duty offices is available in Excise Duty Memorandum 1.1.2, Regional Excise Duty Offices on the CRA’s Web site at www.cra-arc.gc.ca/E/pub/em/edm1-1-2/README.html.
The completed form B273, Excise Return – Tobacco Products Inventory Tax, and payment are both due on or before February 29, 2008.
For more information on this proposed inventory tax, please visit the Department of Finance’s Web site at http://www.fin.gc.ca/budtoce/2007/ec07_e.html or contact any CRA regional excise duty office.
SOURCE: CRA Newsroom