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Subject:
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Computation of Additional Duty on Cigars
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Dear XXXXX
Thank you for your letter XXXXX concerning the calculation of additional duty on cigars pursuant to the Excise Act, 2001 (the Act). More specifically, your questions refer to the deduction from the manufacturer's selling price for cash discounts allowed to wholesalers and the use of an XXXXX in the determination of the sale price used to calculate the additional duty on cigars.
In the past, for the purpose of calculating the excise tax on cigars under the Excise Tax Act, the CCRA permitted a deduction from the manufacturer's selling price for cash discounts allowed to wholesalers. Under the Excise Act, 2001, the calculation of the sale price of cigars and cash discounts allowed by the manufacturers will continue to be deducted from the selling price for the purpose of determining the "sale price" for additional duty on cigars.
Your request to use an XXXXX in the determination of the "sale price" of cigars has been reviewed and we are unable to approve such a practice. In order to ensure the accuracy of the calculation of additional duty on cigars, the timeliness of the remittance and to assist in the verification of compliance of the Act, determination of the sale price must be based on the actual selling price as per your sales invoice. Therefore, the actual cash discount must be used to determine the sale price of the cigars.
Should you have any questions or concerns in these matters, please feel free to contact Marc Rivard at (613) 957-4136 or myself at (613) 954-4208.
Yours sincerely,
Preston Gallant, CGA
Manager - Excise Duty
Excise Duties and Taxes Division
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