November 2014

The Excise Act, 2001 provides for relief from special duty and marking requirements for the export of tobacco products of brands that are not normally sold in Canada, as long as they are prescribed by regulation. More specifically, subsection 38(3) of the Act provides the exemption from the marking requirements for tobacco products and subsection 58(1) provides for relief from the special duty for exported products.

In January 2015, the Canada Revenue Agency (CRA) will put forward a submission for amendments to the Regulations Respecting Prescribed Brands of Manufactured Tobacco and Prescribed Cigarettes and the Regulations Relieving Special Duty on Certain Tobacco Products to add brands of tobacco products.

In order to have brands included in the regulatory amendments package, a tobacco manufacturer must submit a detailed business plan and supporting documentary evidence, which should comprise at least the following elements:

• product formulation – how it differs from Canadian product in terms of physical characteristics before and during consumption;
• export markets – contracts in place, in development or being negotiated;
• details of product and packaging graphics for the intended market; and
• business projections (e.g., volume, sales, markets).

Only once the brands are published in Part II of the Canada Gazette and form part of the Regulations will they be considered as brands "prescribed" for the purposes of subsections 38(3) and 58(1) of the Act.

Tobacco manufacturers must submit their requests and accompanying documentation no later than January 15, 2015 to:

Excise Duties and Taxes Division
Excise Duty Operations – Tobacco
Excise and GST/HST Rulings Directorate
Legislative Policy and Regulatory Affairs Branch
Canada Revenue Agency
320 Queen Street
Ottawa ON K1A 0L5