Please note that the following document, although correct at the time of issue, may not represent the current position of the Canada Revenue Agency. / Veuillez prendre note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'Agence du revenu du Canada.
Excise Duties & Taxes Division
Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 20th floor
320 Queen Street
Ottawa ON K1A 0L5
[Addressee]
Case Number: 173067
Dear [Client]:
Subject: EXCISE INTERPRETATION
Brewery expansion
Thank you for your [correspondence] of September 23, 2015 to […] that was forwarded to us for a response.
All legislative references are to the Excise Act and the regulations therein, unless otherwise specified.
We understand that you wish to clarify the application of the Act to the following set of facts:
1. […][XYZ] is a licensed brewer under the Act, operating a brewery at […][Location 1], […][in Province X].
2. [XYZ] wants to expand its operations and relocate its packaging activities to […][a nearby building (Location 2)] where they will install […][tanks].
3. The two buildings are not adjoined; they are separated by a business entity that is […] not related or associated with [XYZ].
4. […]. [XYZ] will install an overhead pipeline […] to transfer finished beer from [Location 1] to [Location 2]. We understand that [XYZ] has obtained the required municipal approval for installing the pipeline and there are no impediments from the neighbouring businesses.
5. The pipeline will transport finished beer from [tanks] at [Location 1] to [tanks] installed at [Location 2] and all [tanks] are calibrated in accordance with the Act.
6. The finished beer will then be packaged at [Location 2] and stored in a cold room at the back before being distributed. The product will only move in one direction through the pipeline.
7. There will be no taps or other outlet valves on the overhead pipeline; quality control tests will be performed on samples obtained from the [tanks] at both locations. Shut-off valves will be attached at each end of the line for maintenance purposes.
8. [XYZ] confirms that no changes will be made to the beer at [Location 2]. The equipment at that location will be for packaging and storing beer only.
INTERPRETATION REQUESTED
You would like to know whether [XYZ] requires a separate licence to carry out the packaging activities at [Location 2]. You also seek clarification whether any changes are required to the security bond.
INTERPRETATION GIVEN
Based on the facts outlined above and our review of the legislation and publications, we have determined that the proposed operations meet the definition of “brewery” in the Act. Therefore, a single brewer’s licence is sufficient for [XYZ] brewing operations located at [Location 1] and [Location 2], [Province X].
The licence, however, needs to be amended to include both physical locations as part of the brewery. Similarly, an amendment to the security bond is required to add [Location 2] as part of the brewery.
This interpretation does not exclude [XYZ] from meeting the usual licensing requirements or any other provisions under the Act. This includes inspection of premises, control and accountability of bulk beer (in particular transfers between the two locations), responsibility for excise duty liability, and maintaining proper books and records.
This interpretation may no longer be valid if there is any change to your proposed activities or the stated facts; […].
EXPLANATION
Under section 4 of the Act,
"brewery" means any place or premises where any beer is manufactured, and all offices, granaries, mash-rooms, cooling-rooms, vaults, yards, cellars and store-rooms connected therewith or in which any material to be used in the manufacture of beer is kept or stored, where any process of manufacture is carried on, where any apparatus connected with that manufacture is kept or used or where any of the products of brewing or fermentation are kept or stored, shall be held to be included in and to form part of the brewery to which they are attached or appurtenant; and
“brewer” means any person who conducts, works, occupies or carries on any brewery either personally or by an agent.
The range of activities and purposes that are included in the definition of brewery indicates that a brewery is a place where an entity can perform many functions. A brewery is not limited to purely production activities; it includes related areas (e.g., packaging or storage). The definition points out that the various facilities do not have to be directly attached, though they should clearly be part of one particular operation.
In our opinion the definition of “brewery” describes the activities [XYZ] proposes.
In accordance with the qualifications and guidelines set out in Memorandum 1-4 Excise and GST/HST Rulings and Interpretation Service, this interpretation, including any additional information, is not a ruling and does not bind the Canada Revenue Agency (CRA) with respect to a particular situation. Future changes to the Act, regulations, the CRA’s interpretative policy or any information provided herein could affect the interpretation.
For your convenience, a copy of Memorandum 1-4 is available at http://www.cra-arc.gc.ca/E/pub/gm/1-4/README.html.
If you have any questions or require clarification with respect to any of the issues discussed in this letter, please call me at (613) 957-4156 or Joy Piepjohn, Manager, Excise Duty Operations – Alcohol at (613) 957- 8642.
Yours truly,
Rupam Faruquee
Rulings Officer
Excise Duty Operations – Alcohol
Excise Duties & Taxes Division
Excise and GST/HST Rulings Directorate
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