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, 20th floor
320 Queen Street
Ottawa ON K1A 0L5
[Addressee]
Case Number: 142641
April 16, 2012
Dear [Client]:
Subject: EXCISE INTERPRETATION
Excise Duty applicable to 120 millimetre “Slim” cigarettes under the Excise Act, 2001
Thank you for your [correspondence] of February 22, 2012, concerning the application of Excise Duty to “slim” cigarettes.
All legislative references are to the Excise Act, 2001 (the “Act”) unless otherwise specified.
INTERPRETATION REQUESTED
You would like to know whether “slim” cigarettes, of 120 millimetres in length, are subject to a “special policy” under the Act.
INTERPRETATION GIVEN
Issue:
Whether “slim” cigarettes, of 120 millimetres in length, are subject to a special policy under the Excise Act, 2001.
Applicable Legislation:
2. “cigarette” includes any roll or tubular construction intended for smoking, other than a cigar or a tobacco stick. If a cigarette exceeds 102 mm in length, each portion of 76 mm or less is considered to be a separate cigarette.
“packaged” means (a) in respect of a…tobacco product, packaged in a prescribed package.
Schedule 1 (Section 42)
Rates of Duty on Tobacco Products
1. Cigarettes
(b) $0.425 for each five cigarettes or fraction of five cigarettes contained in any package, in any other case.
Analysis:
There is no “special policy” under the Act applicable to “slim” cigarettes.
Cigarettes, as defined, include any roll or tubular construction other than cigars or tobacco sticks that are intended for smoking, and are subject to duty at the applicable rate of 42.5 ¢ per five cigarettes or fraction thereof contained in any package.
However, when a single tubular construction exceeds the length of 102 millimetres, the Act states that “each portion of 76 [millimetres] or less is considered to be a separate cigarette.” Accordingly, when it comes to the issue of a “slim” cigarette that is 120 millimetres in length, it would be considered two “cigarettes” for Excise Duty purposes.
Therefore, in the example you cited in your correspondence, the 20 “slim” cigarettes contained in one package would be considered 40 “cigarettes” for Excise Duty purposes, and the application of Excise Duty would thus be 42.5 ¢ per five “cigarettes”, multiplied by 8 (total 40), resulting in an applicable duty rate of $3.40 per package.
Conclusion:
Based on the information provided, “slim” cigarettes of 120 millimetres in length are considered to be two “cigarettes” for Excise Duty purposes under the Excise Act, 2001.
The foregoing comments represent our general views with respect to the subject matter of your request. These comments are not rulings and, in accordance with the guidelines set out in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service, do not bind the Canada Revenue Agency with respect to a particular situation. Future changes to the ETA, regulations, or our interpretative policy could affect this interpretation.
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 613-957-1140.
Yours truly,
Neil Varan
Excise Duty Operations - Tobacco Unit
Excise Duties and Taxes Division
Excise and GST/HST Rulings Directorate
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