ET/SL 6

March 25, 1994

The federal government has proposed that suppliers of unmarked cigarettes to retailers on Indian reserves in Ontario be permitted to obtain their stocks of these products for consumption by Indians on reserves in Ontario, at the same rate of excise tax as that applicable to Ontario-marked cigarettes.

This means that if you hold a permit issued under section 9 of the Tobacco Tax Act of Ontario, you will be entitled to obtain unmarked cigarettes, for resale to on-reserve retailers at the excise tax rate of $0.01888 per five cigarettes or fraction of five cigarettes in any package, on and after March 26, 1994.

If you obtain unmarked cigarettes at the reduced rate of excise tax, you will be able to sell these unmarked cigarettes to on-reserve retailers in amounts that do not exceed the quantity that the on-reserve retailer is authorized to purchase under the Tobacco Tax Act of Ontario.

If you sell these unmarked cigarettes to persons other than on-reserve retailers or sell unmarked cigarettes to on-reserve retailers in quantities that exceed the quantities that the on-reserve retailer is authorized to purchase under the Tobacco Tax Act, you will be liable for payment of an excise tax equal to the difference between the tax imposed on Ontario-marked cigarettes and the tax imposed on unmarked cigarettes. That difference currently amounts to $4.60 per carton of 200 cigarettes.

Persons liable for payment of this excise tax will be required to self-assess and remit the tax to the federal government. Failure to do so will make those persons liable for assessment, by Revenue Canada officers, of not only the tax but also of penalty and interest.

The Excise Tax Act, under which the excise tax is imposed, makes it an offence to not pay excise taxes, as required. Persons convicted of the offence of failure to pay excise taxes are subject to court-imposed fines of up to $1,000, plus an amount equal to the unpaid taxes or, on default of payment of the fine, for a term of imprisonment of not more than twelve months.

Anyone who sells these unmarked cigarettes to persons other than on-reserve retailers in Ontario or Indian consumers in Ontario will be guilty of an offence and liable for a fine of the greater of $1,000 and triple the $4.60 per carton difference between the excise tax applicable to marked and unmarked cigarettes.

In addition to the reduction of excise tax payable on the unmarked cigarettes for resale to on-reserve retailers, the government has provided for a rebate to persons who held tax-paid stocks of these unmarked cigarettes intended for resale to on-reserve retailers on February 22, 1994. The rebate will be 2.3› per cigarette and will be payable to persons who hold permits under section 9 of the Tobacco Tax Act of Ontario.

These rebates will be in addition to the basic rebate of $5 per carton of 200 cigarettes payable to retailers and wholesalers that held tax-paid stocks of cigarettes on February 22, 1994.

In order to obtain unmarked cigarettes at the reduced rate of excise tax on and after March 26, 1994, permit-holders will have to provide the manufacturer from whom they purchase the cigarettes with a signed certificate worded as on the opposite page.

Further information on these changes is available from your local Revenue Canada district office.

Certificate to Purchase Unmarked Cigarettes for Resale to On-Reserve Retailers in Ontario

I certify that (Name of company, firm, etc.):

• is currently authorized, by virtue of a permit issued pursuant to section 9 of the Tobacco Tax Act of Ontario, to purchase unmarked cigarettes for sale to retailers on Indian reserves; and
  
• is purchasing the unmarked cigarettes for resale to on-reserve retailers in Ontario;

and therefore qualifies for the reduced rate of excise tax applicable to cigarettes that are clearly marked to indicate that they are intended for retail sale in the Province of Ontario.

Name: .....................

Position:........ Signature:............ Date:.........