Budget 2024 – Cigarette Inventory Tax on April 17, 2024
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Budget 2024 – Cigarette Inventory Tax on April 17, 2024
Excise Duty Notice EDN94
April 2024
This notice provides information on the cigarette inventory tax that is imposed on duty-paid and special-duty-paid cigarettes held in inventory at 12:01 am on April 17, 2024, as proposed in the Notice of Ways and Means Motion tabled at the same time as Budget 2024.
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 CRA regional excise office for additional information. The offices are listed at Contact Information – Excise and Specialty Tax Directorate.
Any commentary in this publication should not be taken as a statement by the CRA that the proposed amendments will be enacted in their current form.
General
On April 16, 2024, the Deputy Prime Minister and Minister of Finance tabled Budget 2024 and announced proposed amendments to the Excise Act, 2001 to impose a tax on duty-paid and special-duty-paid cigarettes held in inventory at 12:01 am on April 17, 2024. Therefore, most persons that own duty-paid or special-duty-paid cigarettes at the beginning of April 17, 2024, will be subject to the cigarette inventory tax. More specifically, this inventory tax applies to the following:
- 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 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.
Rate
The cigarette inventory tax for April 17, 2024, is $0.02 per cigarette ($4.00 per carton of 200 cigarettes).
Determining inventories
All persons that, at 12:01 am on April 17, 2024, own cigarettes that will be for sale in the ordinary course of their business must determine their inventory of cigarettes in order to calculate the amount of tax.
Inventories must be determined in a fair and reasonable manner. This may include a physical count and must be supported by appropriate books and records.
Persons that must pay the cigarette inventory tax
Persons that hold more than 30,000 cigarettes are liable to pay the cigarette inventory tax. They must complete and file Form B273-1, Excise Return – Cigarette Inventory Tax. However, GST/HST registrants that elected to file returns as separate branches or divisions may also file Form B273-1 returns separately.
Both the completed Form B273-1 and payment of the cigarette inventory tax are due no later than June 30, 2024.
Note that 30,000 cigarettes equates to 150 cartons of 200 cigarettes per carton.
Persons that hold 30,000 cigarettes or less in a separate retail establishment are not liable to report or pay the cigarette inventory tax in respect of the cigarettes held in that separate retail establishment.
Separate retail establishment means a shop or store of a person that satisfies all of the following conditions:
- it is geographically separate from other places of business of the person
- it is where the person regularly sells cigarettes to consumers attending the shop or store
- it is a retail establishment 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 that the personal property of an IndianFootnote 1 or an Indian band situated on a reserve is exempt from tax. If an Indian individual (or a partnership of Indian individuals, or an Indian band) owns cigarette products that are situated on a reserve, they are not required to pay the cigarette inventory tax.
However, if the owner of the cigarettes is a corporation situated on a reserve, the tax exemption does not apply and the cigarette inventory tax is payable.
Further information
For all technical publications related to excise duties, go to Excise duties technical information.
For information on how to make a general or technical enquiry on excise duties, go to Contact Information – Excise and Specialty Tax Directorate.
For information on how to request a ruling or interpretation related to excise duties, go to Requesting an Excise and Specialty Tax Ruling or Interpretation.
Footnotes
- Footnote 1
-
The Canada Revenue Agency uses the term Indian because it has legal meaning under the Indian Act.
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- Date modified:
- 2024-04-16