Please note that the following document, although correct at the time of issue, may not represent the current position of the Canada Revenue Agency. / Veuillez prendre note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'Agence du revenu du Canada.
Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 15th floor
320 Queen Street
Ottawa ON K1A 0L5
[Addressee]
Case Number: 164239
September 16, 2014
Dear [Client]:
Subject: EXCISE DUTY RULING
Malt-based alcohol beverage
Thank you for your August 8, 2014 letter to our […] regional office that was forwarded to us for reply.
All legislative references are to the Excise Act and the regulations therein, unless otherwise specified.
STATEMENT OF FACTS
Our understanding of the facts is as follows:
1. […][XYZ] is a line of malt-based alcohol beverages currently produced by or on behalf of […][the Company] in […].
2. The brewing and production process for the [XYZ] products does not involve any process of distillation and is described in the […] steps in your aforementioned letter of [mm/dd/yyyy].
3. The [XYZ] products will be brewed and produced in Canada.
4. [XYZ] comes in various fruit flavours with either […]% or […]% absolute ethyl alcohol by volume.
5. [The Company] is not a licensed brewer under the Act, which means they are not authorized to manufacture beer in Canada.
RULING REQUESTED
You would like to know whether the [XYZ] products will fall within the definition of “beer” or “malt liquor” in section 4 of the Act and the rate of excise duty that will apply if produced in Canada.
RULING GIVEN
Based on the facts set out above and our review of the related legislation and publications, and our review of your submitted brewing and production process, we rule that [XYZ] products fall within the definition of “beer” or “malt liquor” in section 4 of the Act provided the absolute ethyl alcohol by volume does not exceed 11.9%. This also means that the products can only be produced in Canada by a brewer licensed under the Act.
We also rule that the rate of excise duty will either be the reduced rate as per section 170.1 and Part II.1 of the Schedule to the Act, or the general rate as per section 170 and Part II of the Schedule to the Act.
Reduced rates of duty apply to the first 75,000 hectolitres of beer and malt liquor that are:
* brewed in Canada by the licensed brewer and any person related or associated with that brewer; and
* more than 0.5% alcohol strength.
The general rate of duty per hectolitre that will apply to the [XYZ] product that is not eligible for the reduced rates of duty is $31.22.
EXPLANATION
The [XYZ] products fall within the definition of “beer” or “malt Liquor” in section 4 because the product as described:
1. is a fermented liquor brewed from malted barley;
2. does not involve any process of distillation;
3. has an alcoholic strength less than 11.9% of absolute ethyl alcohol by volume;
4. is not “wine” as defined in section 2 of the Excise Act, 2001; and
5. may qualify for the rates of excise duty in section 170.1 and set out in Part II.1 of the Schedule because it is brewed in Canada.
Any person producing beer or malt liquor in Canada must be licensed as per section 10 of the Act. At the time of writing, [the Company] is not a licensed brewer so they cannot produce the product in Canada. The product could be produced by a licenced brewer on [the Company’s] behalf. For licensing information, please contact your regional excise duty office. A listing of these offices is available in Excise Duty Memorandum EDM1-1-2 - Regional Excise Duty Offices available on the CRA website at http://www.cra-arc.gc.ca/E/pub/em/edm1-1-2/README.html
In accordance with the qualifications and guidelines set out in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service, the Canada Revenue Agency (CRA) is bound by the ruling(s) given in this letter provided that: none of the issues discussed in the ruling(s) are currently under audit, objection, or appeal; no future changes to the Act, regulations or the CRA’s interpretative policy affect its validity; all relevant facts and transactions have been fully and accurately disclosed; and there is no change to the information provided that would alter the products in a manner so that it no longer falls within the definition of “beer” or “malt liquor”.
If you require clarification with respect to any of the issues discussed in this letter, please call me at (613) 954-5775 or Joy Piepjohn, Acting Manager, Excise Duty Operations – Alcohol at (613) 957-8462.
Yours truly,
Ellen Hall
Alcohol Unit
Excise Duty and Taxes Division
Excise and GST/HST Rulings Directorate