Summerside PE C1N 6E7

0000001
March 13, 2014

Cigarette Inventory Tax
Information Package

Background

On February 11, 2014, the Government of Canada announced amendments to the Excise Act, 2001, imposing a tax on stamped duty-paid cigarettes held in inventory at the beginning of the day on February 12, 2014.

Persons with stamped duty-paid cigarettes must file Form B273, Excise Return – Cigarette Inventory Tax, and pay the tax on that inventory on or before April 30, 2014. In certain situations, the tax is not payable. We have enclosed the required Form B273 and a remittance voucher. These items provide more information about the cigarette inventory tax.

An inventory of all stamped duty-paid cigarettes owned by a person at the beginning of February 12, 2014, must be determined. The inventory must be determined in a fair and reasonable manner (can include a physical count) and has to be supported by books and records.

Persons who may be liable to pay the tax

Subject to the small retail inventory tax exemption (see below), the tax is payable by persons that held inventories of stamped duty-paid cigarettes as of 12:01 a.m. on February 12, 2014, such as domestic retailers, wholesalers, and tobacco manufacturers.

Small retail inventory tax exemption

The cigarette inventory tax exemption applies to retailers that hold 30,000 or fewer stamped duty-paid cigarettes at a separate retail establishment.

A separate retail establishment means a shop or a store of the person that meets all of the following conditions:

• is geographically separate from other places of business of the person;
• is where the person regularly sells (other than through vending machines) cigarettes to consumers attending the shop or store; and
• is a retail establishment for which separate records are kept.

If a retailer has a separate retail establishment with an inventory of 30,000 or fewer stamped duty-paid cigarettes, the cigarette inventory tax is not payable on the inventory held at that location. However, if the inventory is more than 30,000 stamped duty paid cigarettes, the tax is payable on the whole inventory at that location.

A retailer may have more than one location, but keeps one set of records for all the locations. If so, the retailer is not considered to have separate retail establishments, and must include a total of all stamped duty paid cigarettes at all locations in determining the 30,000 cigarette threshold.

Inventory

The inventory includes all stamped duty-paid cigarettes that the person owns. This includes, but is not limited to, products stored at the person's warehouse, storerooms, cash-and carry outlets, retail outlets, display areas, and delivery trucks. As well, stamped duty-paid cigarettes owned at the beginning of February 12, 2014, but received after that date (in transit), are included in the inventory.

Cigarette inventory tax rate

The cigarette inventory tax rate per cigarette is $0.02015.

More information

For more information about the cigarette inventory tax go to www.cra-arc.gc.ca/menu/EXAN-e.html.

You can also get information from a regional excise duty office. For a list of these offices go to www.cra-arc.gc.ca/E/pub/em/edm1-1-2/.

If you previously filed a B273 return for tobacco inventory taxes, you may use the same account number that was assigned. Your account number is printed on your notice of assessment. If this is your first time filing a B273 return or if you need help in determining your account number, you can contact the Summerside Tax Centre for further assistance.

Summerside Tax Centre
275 Pope Road
Summerside PE C1N 6E7
1-877-432-5472