EDBN6 Excise Duty Rate Changes on Beer Produced by Small and Mid-Sized Brewers
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EDBN6 Excise Duty Rate Changes on Beer Produced by Small and Mid-Sized Brewers
May 2006
On May 2, 2006, the Minister of Finance tabled a Notice of Ways and Means Motion to amend the Excise Act to reduce the rates of excise duty on beer manufactured by brewers that produce no more than 300,000 hectolitres in a calendar year.
Effective July 1, 2006, brewers will be eligible for reduced rates of duty if their production for the previous calendar year and for the current calendar year does not exceed 300,000 hectolitres. Beer packaged prior to July 1, 2006 is not eligible for the reduced rate of excise duty.
Effective July 1, 2006, the following rates of duty will apply for eligible brewers:
| Annual production volume (hectolitres) | Rate of excise duty per hectolitre (greater than 2.5% alcohol) | Rate of excise duty per hectolitre (greater than 1.2% but not more than 2.5% alcohol) | Rate of excise duty per hectolitre (not more than 1.2% alcohol) |
|---|---|---|---|
| First 2,000 | $3.122 | $1.561 | $0.259 |
| Next 3,000 (2001 - 5,000) | $6.244 | $3.122 | $0.518 |
| Next 10,000 (5,001 - 15,000) | $12.488 | $6.244 | $1.036 |
| Next 35,000 (15,001 - 50,000) | $21.854 | $10.927 | $1.814 |
| Next 25,000 (50,001 - 75,000) | $26.537 | $13.269 | $2.202 |
| Over 75,000 (75,001 - 300,000) | $31.22 | $15.61 | $2.591 |
Brewers who produce more than 300,000 hectolitres of beer in a calendar year or in the previous calendar year are not eligible for the reduced rate of duty and must apply the full rate of duty as specified in Schedule II to the Excise Act. Please refer to Excise Duty Notice, Excise Duty Rate Changes - July 1, 2006 (EDN9) for information concerning all the duty rates on beer.
Examples
1. If a brewer produced less than 300,000 hectolitres in 2005 and produces over 300,000 hectolitres in 2006, they must pay the full rate of duty for all the beer produced in 2006, including the first 300,000 hectolitres.
2. If a brewer produced less than 300,000 hectolitres of beer in 2005 and forecasts production for 2006 to be less than 300,000 hectolitres, the brewer may pay at the reduced rates of duty. However, if at any time in the calendar year (e.g., December 2006), the brewer exceeds 300,000 hectolitres of production, the brewer must pay the full rate of duty retroactively for the full year. Further, interest on underpaid amounts will be calculated as of the date the amounts were payable.
To avoid the above scenario, if a brewer estimates that its production may approach 300,000 hectolitres for the coming year, the brewer may choose to pay the full rate of duty during the year and claim a refund for the reduced rates of duty when it becomes clear that the 300,000 hectolitre threshold will not be reached.
If a brewer packages beer that the brewer did not produce, the quantity of beer must be included in the threshold amount of the brewer who ultimately pays duty on the beer.
Additional information
The form K50B, Monthly Return - Excise Duty - Beer will be amended to reflect these changes and will be made available on CRA's Web site at www.cra-arc.gc.ca/tax/technical/exciseduty-forms-e.html.
For more information on this subject, contact your nearest regional excise duty office. A list of regional excise duty offices is available in Excise Duty Memorandum 1.1.2, Regional Excise Duty Offices on CRA's Web site at www.cra-arc.gc.ca/menu/EXMS-e.html.
This Excise Duty notice does not replace the law found in the Excise Act or its regulations. It is provided for convenience and reference purposes only. Since it may not completely address your particular operation, you may wish to refer to the relevant act or regulations or contact your regional excise duty office for additional information
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- Date modified:
- 2006-03-24