10.1.4 - Completing an Excise Duty Return - Licensed User

August 2003

Disclaimer

The information in this memorandum does not replace the law found in the Act and its Regulations. It is provided for your reference. As it may not completely address your situation, you may wish to refer to the Act or its Regulations, or contact any Canada Customs and Revenue Agency (CCRA) tax services office for additional information.

[Proposed amendments]

This memorandum reflects the proposed amendments to the Excise Act, 2001, which the Minister of Finance announced on June 24, 2003. [Where information reflects proposed amendments, the information is enclosed in square brackets.] Any commentary in this memorandum should not be taken as a statement by the CCRA that such amendments will in fact be enacted in their current form.

Table of Contents

• General
• Line-by-line instructions
• Where to file
• Penalties
• Retention of information

General

Licensed user
s 14

1. A user's licence authorizes a person (i.e., a licensed user) to possess and use bulk alcohol, non-duty-paid packaged alcohol, [or a restricted formulation] for specific purposes. The responsibilities of a licensed user are discussed in detail in Excise Duty Memorandum 3.1.2, Licensed Users.

When is excise duty payable?

2. In many cases licensed users will have no liability to pay excise duty, since they generally use spirits and wine for purposes for which excise duty is not payable. However, there are some situations where a licensed user will have to pay excise duty, notably:

• where spirits or wine in the possession of the licensed user are unaccounted for;
• where spirits or wine in the possession of the licensed user are taken for use;
• where less than 0.5 kilograms of acetic acid per litre of absolute ethyl alcohol (LAA) is produced in the process of producing vinegar from spirits or wine by the licensed user. In such cases, a portion of the alcohol is deemed to be taken for use; or
• where packaged alcohol imported by the licensed user is released from Customs without the payment of excise duty.

Rates of excise duty - spirits
Schedules 4 and 5
s 122 and 123

3. The following rates are used to calculate the amount of excise duty payable on spirits:

• $11.066 per LAA (spirits containing more than 7% of absolute ethyl alcohol by volume); and
• $0.2459 per litre of spirits containing not more than 7% of absolute ethyl alcohol by volume.

Rates of excise duty - wine
Schedule 6
s 134 and 135

4. The following rates are used to calculate the amount of excise duty payable on wine:

• $0.0205 per litre of wine containing not more than 1.2% of absolute ethyl alcohol by volume;
• $0.2459 per litre of wine containing more than 1.2% but not more than
  7% of absolute ethyl alcohol by volume; and
• $0.5122 per litre of wine containing more than 7% of absolute ethyl alcohol by volume.

Possession vs. responsibility

5. Inventories are reported based on the possession of the product, regardless of who is responsible. There may be situations where a licensed user is responsible for the spirits or wine, but does not have them in their possession, or vice versa. The licensed user's books and records should reflect these situations for verification during audit and compliance reviews.

6. Include on this excise duty return only information that applies to the fiscal month for which you are filing, and only complete the lines of the return that apply to you. Indicate NIL on the lines that do not apply to you.

7. Additional information with respect to the filing of monthly returns, remitting excise duty, and paying the correct amount of excise duty is provided in Excise Duty Memorandum 10.1.1, Returns and Payments.

Line-by-line instructions

Identification of licensee

Identification

8. The top left portion of all three pages of the return is used to identify the licensed user. A licensed user must complete this section on all pages by entering the complete legal name, trading name (if different from the legal name), and mailing address.

Field 1 –
Business Number

9. Enter your 9-digit Business Number (BN), 2-letter (RD) program identifier, and 4-digit program account number.

Field 2 –
Period covered

10. Enter the fiscal month covered by the return. The dates should be entered in the order year / month / day.

Field 3 –
Due date of return

11. The due date for an excise duty return is the last day of the fiscal month following each fiscal month of a licensee. Enter this date for the fiscal month for which you are filing. The due date should be entered in the order year / month / day.

Description – add any missing descriptions

Line 4 –
Spirits >7% (LAA)

12. Under the heading "Quantity", enter the total LAA of spirits containing more than 7% absolute ethyl alcohol by volume on which excise duty is payable. Calculate the amount of excise duty payable and enter the result under "Duty payable" on line 4.

Line 5 –
Spirits less than or equal to 7% (L)

13. Under the heading "Quantity", enter the total litres of spirits containing
7% or less of absolute ethyl alcohol by volume on which excise duty is payable. Calculate the amount of excise duty payable and enter the result under "Duty payable" on line 5.

Line 6–
Wine > 7% (L)

14. Under the heading "Quantity", enter the total litres of wine containing more than 7% of absolute ethyl alcohol by volume on which excise duty is payable. Calculate the amount of excise duty payable and enter the result under "Duty payable" on line 6.

Line 7 –
Wine > 1.2%
but not > 7% (L)

15. Under the heading "Quantity", enter the total litres of wine containing more than 1.2% but not more than 7% of absolute ethyl alcohol by volume on which excise duty is payable. Calculate the amount of excise duty payable and enter the result under
"Duty payable" on line 7.

Line 8 –
Wine less than or equal to 1.2% (L)

16. Under the heading "Quantity", enter the total litres of wine containing 1.2 % or less of absolute ethyl alcohol by volume on which excise duty is payable. Calculate the amount of excise duty payable and enter the result under "Duty payable" on line 8.

Line 9 –
Total (lines 4 to 8)

17. Add the amounts of "Duty payable" from lines 4 to 8 and enter the total amount on line 9.

Authorized deductions / refunds

Lines 10 to 14
OR
Line 17

18. There are different ways to claim an excise duty refund.

• by recording the quantities on lines 10 to 14 for any preauthorized refunds; or
• by recording the total refund on line 17 and attaching form B256,
  General Application for Refund of Excise Duty Under the Excise Act, 2001;

or

19. If you claim refunds on lines 10 to 14 of this return, do not include them on
line 17, and do not include them on form B256, General Application for Refund of Excise Duty Under the Excise Act, 2001.

20. If you have already filed your refund claim separately, do not record any of that information on this return.

21. If you expect a refund from a previous fiscal month, but have not yet received it, do not include that information on this return.

Line 10
Spirits > 7% (LAA)

22. Under the heading "Quantity", enter the total LAA of spirits containing more than 7% of absolute ethyl alcohol by volume for which a refund has been preauthorized. Calculate the amount of excise duty refundable and enter the result under
"Deduction / refund" on line 10.

Line 11 –
Spirits less than or equal to 7% (L)

23. Under the heading "Quantity", enter the total litres of spirits containing 7% or less of absolute ethyl alcohol by volume for which a refund has been preauthorized. Calculate the amount of excise duty refundable and enter the result under
"Deduction / refund" on line 11.

Line 12 –
Wine > 7% (L)

24. Under the heading "Quantity", enter the total litres of wine containing more than 7% of absolute ethyl alcohol by volume for which a refund has been preauthorized. Calculate the amount of excise duty refundable and enter the result under
"Deduction / refund" on line 12.

Line 13 –
Wine > 1.2%
but not > 7% (L)

25. Under the heading "Quantity", enter the total litres of wine containing more than 1.2% but not more than 7% of absolute ethyl alcohol by volume for which a refund has been preauthorized. Calculate the amount of excise duty refundable and enter the result under "Deduction / refund" on line 13.

Line 14 –
Wine less than or equal to 1.2% (L)

26. Under the heading "Quantity", enter the total litres of wine containing 1.2% or less of absolute ethyl alcohol by volume for which a refund has been preauthorized. Calculate the amount of excise duty refundable and enter the result under
"Deduction / refund" on line 14.

Line 15 –
Total (lines 10 to 14)

27. Add the "Deduction / refund" amounts from lines 10 to 14 and enter the total on line 15.

Line 16 –
Net payable
(line 9 minus line 15)

28. Calculate the "Net payable" amount by subtracting line 15 from line 9 and enter the result on line 16.

Line 17 –
Credits
(form B256 attached)

29. Enter an amount on line 17 only if you are attaching a completed form B256, General Application for Refund of Excise Duty Under the Excise Act, 2001, and you have not claimed the refunds on lines 10 to 14 of this return.

Line 18 –
Amount due
(line 16 minus line 17)

30. Subtract line 17 from line 16 and enter the result as "Amount due" on line 18.
If the amount is negative, place a minus sign to the left of the amount.

Line 19 –
Payment herewith / credit due

31. If the result on line 18 is a positive amount, enter that amount on line 19 and circle "payment herewith". Enclose a cheque or money order, in Canadian dollars, payable to the Receiver Generalfor Canada. If you have already paid the amount due to the CCRA or an authorized financial institution, enter NIL on line 19.

32. If the result on line 18 is a negative amount, enter the same amount on line 19 and circle "credit due".

Client contact name / telephone number

33. Enter the complete name and telephone number of a person who may be contacted concerning this excise duty return.

Certification

34. An authorized representative must print their name and title, sign and date the return, and provide a current telephone number.

Opening balance

Line A –
Opening balance

35. The opening balance of this return must equal the last fiscal month's closing balance. Enter amounts for "Opening balance" under the applicable columns on line A.

Additions to inventory

Domestic

36. For each column, enter the total quantity of domestic spirits added to inventory.

Imported

37. For each column, enter the total quantities of spirits imported from the
United States and countries other than the United States.

Line B –
Total additions

38. Add the above quantities of spirits (i.e., all additions to inventory) and enter the sums on line B.

Reductions to inventory

Approved formulations

39. For each column, enter the total quantity of spirits used in an approved formulation.

Used to produce vinegar or fortify wine

40. For each column, enter the total quantities of spirits used to produce vinegar and fortify wine.

Returned to alcohol licensee

41. For each column, enter the total quantity of spirits returned to alcohol licensees or excise warehouse licensees.

Exported

42. For each column, enter the total quantities of spirits exported to the
United States and countries other than the United States.

Used for analysis

43. For each column, enter the total quantity of spirits used for analysis in a manner approved by the CCRA.

Destroyed

44. For each column, enter the total quantity of spirits destroyed in a manner approved by the CCRA.

Removed for other uses

45. For each column, enter the total quantity of spirits removed from inventory for other purposes and specify the purpose for removal (e.g., taken for use or unaccounted losses).

Line C –
Total reductions

46. Add the above quantities of spirits (i.e., all reductions to inventory) and enter the sums on line C.

Inventory adjustments

Line D –
Inventory adjustments
(+ or -)

47. Adjustments may be necessary to balance the physical inventory with the book inventory. The closing or book inventory must agree with the physical inventory for the fiscal month. All adjusting entries are subject to audit and must be entered as
"Inventory adjustments" on line D.

Closing balance

Line E –
Closing balance
(A+B) - C±D

48. The closing balance is the sum of lines A and B, minus line C, plus or minus any adjustment on line D: (A+B) - C±D. This closing balance will become the opening balance for the following fiscal month.

Opening balance

Line A –
Opening balance

49. The opening balance of this return must equal the last fiscal month's closing balance. Enter amounts for "Opening balance" under the applicable columns on line A.

Additions to inventory

Domestic

50. For each column, enter the total quantity of domestic wine added to inventory.

Imported

51. For each column, enter the total quantities of wine imported from the
United States and countries other than the United States.

Line B –
Total additions

52. Add the above quantities of wine (i.e., all additions to inventory) and enter the sums on line B.

Reductions to inventory

Approved formulations

53. For each column, enter the total quantity of wine used in an approved formulation.

Used to produce vinegar

54. For each column, enter the total quantity of wine used to produce vinegar.

Blended with spirits to produce spirits

55. For each column, enter the total quantity of wine blended with spirits to produce spirits or [used to produce spirits].

Returned to alcohol licensee

56. For each column, enter the total quantity of wine returned to alcohol licensees or excise warehouse licensees.

Exported

57. For each column, enter the total quantities of wine exported to the United States or countries other than the United States.

Used for analysis

58. For each column, enter the total quantity of wine used for analysis in a manner approved by the CCRA.

Destroyed

59. For each column, enter the total quantity of spirits destroyed in a manner approved by the CCRA.

Removed for other uses

60. For each column, enter the total quantity of wine removed from inventory for other purposes and specify the purpose for removal (e.g., taken for use or unaccounted losses).

Line C –
Total reductions

61. Add the above quantities of wine (i.e., all reductions to inventory) and enter the sums on line C.

Inventory adjustments

Line D –
Inventory adjustment
(+ or -)

62. Adjustments may be necessary to balance the physical inventory with the book inventory. The closing or book inventory must agree with the physical inventory for the fiscal month. Adjusting entries are subject to audit and must be entered as
"Inventory adjustments" on line D.

Closing balance

Line E –
Closing balance
(A+B) - C±D

63. The closing balance is the sum of lines A and B, minus line C, plus or minus any adjustments on line D: (A+B) - C±D. This closing balance will become the opening balance for the following fiscal month.

Where to file

64. You may file your excise duty return and payment by mailing it to the following address:

65. You may also file your excise duty return and payment by delivering it to any CCRA tax services office, or payments may be made at authorized financial institutions.

Penalties

66. Failure to submit a completed excise duty return to a CCRA office by the filing due date may result in a penalty being charged.

Retention of information

Keeping records
s 206

67. You should retain a copy of this return for your records, as the return and any other information used to prepare it are subject to audit and must be retained for verification purposes.

68. Additional information on the requirement to maintain books and records is available in Excise Duty Memorandum 9.1.1, General Requirements for Books and Records.

Date modified:

2003-08-26