15 December 2006 Excise Interpretation 85925 - Excise Tax on gasoline delivered to reserve

Please note that the following document, although correct at the time of issue, may not represent the current position of the Agency. / Veuillez prendre note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'Agence.

Dear XXXXX:

This letter is to follow up on our meeting XXXXX between XXXXX and the Canada Revenue Agency (CRA) regarding the application of the proposed reduced rates of duty for beer or malt liquor (beer) produced under contract.

For the record, Budget 2006 proposed amendments to the Excise Act (Act) to reduce the rates of excise duty on the first 75,000 hectolitres (hL) of beer brewed in a calendar year by licensed brewers. In support of this there were other amendments to deal with contract brewing.

To assist in the administration of these amendments, CRA produced the publication EDBN 9 - Reduced Rates of Excise Duty on Beer Brewed in Canada. In it we outlined that for beer produced under contract, the excise duty must be accounted for using the rate of duty that would be used by the brewer with the greatest production volume at the time of brewing and the quantity produced under contract applies towards the production volume of the producing brewer for purposes of the 75,000 hL limit.

During our meeting you raised the concern that this application of the proposed amendments dealing with contract brewing would effectively decrease XXXXX access to the reduced rates since XXXXX makes beer under contract for other larger breweries.

CRA has reviewed your submission and the underlying proposed legislation. After careful consideration and consultations with the Department of Finance and the two principle brewers' associations we would like to advise that we will be amending our publication EDBN 9 so that the quantity of beer produced under contract applies towards the production volume of the brewer with the greatest production volume for purposes of the 75,000 hL limit.

Beer produced for non-licensed brewers must be accounted for in the production volume of the brewer who produced the beer for purposes of the 75,000 hL limit. The producing brewer will still be required to report all beer produced in their brewery (including contract production) on their monthly return for Excise Duty (K-50).

We trust that you will find the information above acceptable. If you have any questions or require additional information, please do not hesitate to contact me at (613) 952-0178, or Nathalie Robitaille at (613) 947-4138.

Yours truly,

Preston Gallant, B.Comm., CGA
Manager, Excise Duty Operations - Alcohol
Excise Duties and Taxes Division
Excise and GST/HST Rulings Directorate
Legislative Policy and Regulatory Affairs
Revenue Canada Agency

2007/03/15 — RITS 86372 — Requirement to be Licensed