Tobacco Tax Amendments Act, 2001

Link to law: http://laws-lois.justice.gc.ca/eng/AnnualStatutes/2001_16/FullText.html

Tobacco Tax Amendments Act, 2001

S.C. 2001, c. 16

Assented to 2001-06-14

An Act to amend the Customs Act, the Customs Tariff, the Excise Act, the Excise Tax Act and the Income Tax Act in respect of tobacco

SUMMARY

This enactment implements tobacco tax measures announced by the Minister of Finance on April 5, 2001 as part of the government’s initiative to reduce tobacco consumption in Canada, especially among youth. It also implements a measure proposed in Budget 2000 reducing the exemption threshold under the tax on exports of tobacco products before April 6, 2001.

The amendments to the Customs Act, the Customs Tariff, the Excise Act, the Excise Tax Act and the Income Tax Act announced on April 5, 2001 implement new tax measures with respect to domestic tobacco tax rates, exports of tobacco products, tobacco products sold in duty free shops or as ships’ stores, and tobacco products imported by resident travellers, as well as changes to the surtax on tobacco manufacturing profits.

Tobacco Excise Tax Rate Increases. The amendments increase excise tax rates by $2.00 per carton on cigarettes for sale in Ontario and Quebec, $1.35 per carton in Prince Edward Island, 30 cents per carton in New Brunswick and 10 cents per carton in Nova Scotia. The amendments increase excise taxes on tobacco sticks by $1.00 per 200 sticks nation-wide, and on manufactured tobacco other than cigarettes and tobacco sticks by $2.80 per 200 grams on products for sale in Ontario and by $1.00 per 200 grams on products for sale in other provinces and the territories. These tax increases are effective April 6, 2001.

Tax on Exports of Tobacco Products. This enactment implements the Budget 2000 proposal to reduce the exemption threshold under the tax on exports of tobacco products before April 6, 2001 from 2.5% to 1.5% of a manufacturer’s production of tobacco products in the previous calendar year.

The amendments also implement the April 5, 2001 proposal to impose a new two-tiered tax on exports of tobacco products. For exports up to 1.5% of a manufacturer’s production in the preceding calendar year, a new excise tax is imposed at a rate of $10 per carton for cigarettes, $7 per 200 sticks for tobacco sticks, and $6 per 200 grams for manufactured tobacco other than cigarettes and tobacco sticks. The amendments authorize the Minister of National Revenue to refund this tax where the importer provides evidence satisfactory to the Minister that all taxes and duties imposed at the national level under the laws of the foreign country into which the tobacco products are imported have been paid.

For exports over 1.5% of a manufacturer’s production in the preceding calendar year, the amendments impose the current excise duty on tobacco products plus a new excise tax. The sum of the excise duty and excise tax is $22 per carton for cigarettes, $16 per 200 sticks for tobacco sticks, and $12 per 200 grams for manufactured tobacco other than cigarettes and tobacco sticks.

The amendments related to the new two-tiered export tax are effective April 6, 2001.

Tax on Tobacco Products for Sale in Duty Free Shops. The amendments impose excise duty and a new excise tax on Canadian-manufactured tobacco products delivered to duty free shops in Canada, or exported for delivery to foreign duty free shops, payable by the domestic manufacturer. The sum of excise duty and excise tax is $10 per carton for cigarettes, $7 per 200 sticks for tobacco sticks, and $6 per 200 grams for manufactured tobacco other than cigarettes and tobacco sticks. The amendments also impose an equivalent excise tax on imported tobacco products delivered to a duty free shop in Canada, payable by the operator of the duty free shop. The tax on imported tobacco products will be refunded on the first carton or equivalent of each product category sold to an individual who is not a resident of Canada and who exports the product. These measures are effective April 6, 2001.

Tax on Tobacco Products Delivered as Ships’ Stores. The amendments impose excise duty and a new excise tax on Canadian-manufactured tobacco products delivered as ships’ stores in Canada, or exported for delivery as foreign ships’ stores, payable by the domestic manufacturer. The sum of excise duty and tax is $10 per carton for cigarettes, $7 per 200 sticks for tobacco sticks, and $6 per 200 grams for manufactured tobacco other than cigarettes and tobacco sticks. These measures are effective April 6, 2001.

Duty on Traveller’s Tobacco Products. The amendments impose a new duty under the Customs Tariff on manufactured tobacco products imported by a resident of Canada under the terms of the traveller’s allowance. The new duty is imposed at a rate of $10 per carton for cigarettes, $7 per 200 sticks for tobacco sticks, and $6 per 200 grams for manufactured tobacco other than cigarettes and tobacco sticks. This duty will not be imposed on tobacco products imported by an individual for personal use that are stamped in accordance with the Excise Act and on which excise duty has been imposed under that Act. These amendments are effective October 1, 2001.

Tobacco Manufacturers’ Surtax. The amendment increases the rate of the existing surtax imposed under the Income Tax Act on a corporation’s tax on profits from tobacco manufacturing. The rate increase is from 40% to 50% for taxation years ending after April 5, 2001, and is prorated for any taxation year straddling that date.

Miscellaneous Amendments. This enactment also implements a number of related and consequential measures, including provisions related to the application of interest in respect of taxes or duties amended or implemented by this enactment, new restrictions on the entry of tobacco products into bonding warehouses, and on their subsequent removal, and new stamping requirements and new offence and penalty provisions.

Her Majesty, by and with the advice and consent of the Senate and House of Commons of Canada, enacts as follows:

SHORT TITLE

Marginal note:Short title

1. This Act may be cited as the Tobacco Tax Amendments Act, 2001.

R.S., c. 1 (2nd Supp.) CUSTOMS ACT

Marginal note:1993, c. 25, s. 70(1)

2. (1) Paragraph 24(1)(c) of the Customs Act is replaced by the following:

(c) as a duty free shop for the sale of goods free of certain duties or taxes levied on goods under the Customs Tariff, the Excise Tax Act, the Excise Act, the Special Import Measures Act or any other law relating to customs, to persons who are about to leave Canada

(2) Subsection (1) is deemed to have come into force on April 6, 2001.

1997, c. 36 CUSTOMS TARIFF

3. (1) Subsection 21(2) of the Customs Tariff is replaced by the following:

Marginal note:Duty on tobacco imported by traveller

(2) There shall be levied on traveller’s tobacco, at the time of its importation, and paid in accordance with the Customs Act, a duty of

(a) $0.05 per cigarette, in the case of cigarettes;

(b) $0.035 per stick, in the case of tobacco sticks; and

(c) $0.03 per gram, in the case of manufactured tobacco other than cigarettes and tobacco sticks.

Marginal note:Exception — excise duty-paid manufactured tobacco

(3) A duty shall not be levied under this section on manufactured tobacco imported by an individual for their personal use if it is stamped in accordance with the Excise Act and duty has been imposed on it under section 200 of that Act.

Marginal note:Definitions

(4) The definitions in this subsection apply in this section.

“goods subject to excise”

« marchandises assujetties à l’accise »

“goods subject to excise” means

(a) beer or malt liquor, within the meaning of the Excise Act, of heading No. 22.03 or of tariff item No. 2202.90.10 or 2206.00.80;

(b) spirits, within the meaning of the Excise Act, of an alcoholic strength by volume exceeding 22.9% volume, of tariff item No. 2204.21.32, 2204.29.32, 2205.10.30, 2205.90.30, 2206.00.22, 2206.00.72 or 2206.00.92;

(c) spirits, within the meaning of the Excise Act, of heading No. 22.07 or 22.08, other than of tariff item No. 2207.20.11, 2207.20.90, 2208.90.30 or 2208.90.91;

(d) cigars or manufactured tobacco of tariff item No. 2402.10.00, 2402.20.00, 2403.10.00, 2403.91.90, 2403.99.10 or 2403.99.90; or

(e) goods referred to in any of paragraphs (a) to (d) that are classified with the container in which they are imported.

“traveller’s tobacco”

« tabac du voyageur »

“traveller’s tobacco” means manufactured tobacco that is imported by a person at any time and

(a) is classified under tariff item No. 9804.10.00, 9804.20.00, 9805.00.00 or 9807.00.00; or

(b) would be classified under tariff item No. 9804.10.00 or 9804.20.00 but for the fact that the total value for duty as determined under section 46 of the Customs Act of all goods imported by the person at that time exceeds the maximum value specified in that tariff item.

(2) Subsection (1) is deemed to have come into force on April 6, 2001, except that subsection 21(2) of the Act, as enacted by subsection (1), does not apply to tobacco imported before October 1, 2001.

4. (1) Paragraph 83(a) of the Act is replaced by the following:

(a) in the case of goods that would have been classified under tariff item No. 9804.10.00 or 9804.20.00, the value for duty of the goods shall be reduced by an amount equal to that maximum specified value and, in the case of alcoholic beverages and tobacco, the quantity of those goods shall, for the purposes of assessing duties other than a duty under subsection 21(2), be reduced by the quantity of alcoholic beverages and tobacco up to the maximum quantities specified in tariff item No. 9804.10.00 or 9804.20.00, as the case may be;

(2) Subsection (1) comes into force or is deemed to have come into force on October 1, 2001.

5. (1) Section 92 of the Act is amended by adding the following after subsection (2):

Marginal note:Non-application to Canadian manufactured tobacco

(3) This section does not apply to any tax imposed under Part III of the Excise Tax Act, or any duty imposed under the Excise Act, in respect of manufactured tobacco that is manufactured or produced in Canada.

(2) Subsection (1) is deemed to have come into force on April 6, 2001, except that subsection 92(3) of the Act, as enacted by subsection (1), does not apply to manufactured tobacco entered into a bonding warehouse before that day.

6. (1) Note 4 to Chapter 98 of the List of Tariff Provisions set out in the schedule to the Act is replaced by the following:

4. 
For the purpose of this Chapter, “duties” means duties or taxes levied or imposed on imported goods under Part 2 of the Act (other than subsection 21(2)), the Excise Act, the Excise Tax Act, the Special Import Measures Act or any other Act of Parliament relating to customs.

(2) Subsection (1) comes into force or is deemed to have come into force on October 1, 2001.

R.S., c. E-14 EXCISE ACT

Marginal note:1993, c. 25, s. 32(1); 1999, c. 17, par. 144(1)(c)(E)

7. (1) The portion of the definition “cigar stamp” in section 6 of the Excise Act before paragraph (a) is replaced by the following:

“cigar stamp”

« estampille de cigares »

“cigar stamp” means any stamp required by this Act and the ministerial regulations to be affixed to a cigar, or a package, carton, box, crate or other container containing cigars, entered for consumption or imported into Canada, to indicate

Marginal note:1994, c. 37, s. 2; 1999, c. 17, par. 144(1)(c)(E)

(2) The portion of the definition “tobacco stamp” in section 6 of the Act before paragraph (a) is replaced by the following:

“tobacco stamp”

« estampille de tabac »

“tobacco stamp” means any stamp required by this Act and the ministerial regulations to be impressed on, printed on, marked on, indented into or affixed to a cigarette, or a package, carton, box, crate or other container containing manufactured tobacco, entered for consumption or imported into Canada, or to be affixed to Canadian raw leaf tobacco entered for consumption, to indicate

(3) Section 6 of the Act is amended by adding the following in alphabetical order:

“foreign duty free shop”

« boutique hors taxes à l’étranger »

“foreign duty free shop” has the meaning assigned by subsection 2(1) of the Excise Tax Act;

“foreign ships’ stores”

« provisions de bord à l’étranger »

“foreign ships’ stores” has the meaning assigned by subsection 2(1) of the Excise Tax Act;

(4) Subsection (3) is deemed to have come into force on April 6, 2001.

8. (1) The Act is amended by adding the following after section 52:

Marginal note:Limitation on entry of tobacco into bonding warehouse

52.1 Manufactured tobacco shall not be entered into a bonding warehouse if it is intended to be removed for

(a) delivery to a duty free shop licensed as such under the Customs Act;

(b) export for delivery to a foreign duty free shop;

(c) export for delivery as foreign ships’ stores;

(d) entry into a bonded warehouse, licensed as such under the Customs Tariff; or

(e) delivery as ships’ stores in accordance with the regulations made under the Customs Tariff and the Excise Tax Act.

(2) Subsection (1) is deemed to have come into force on April 6, 2001.

Marginal note:R.S., c. 7 (2nd Supp.), s. 63(1); 1993, c. 25, s. 37; 1995, c. 41, s. 109; 1999, c. 17, par. 144(1)(n)(E)

9. (1) Section 58 of the Act is replaced by the following:

Marginal note:Transfer of goods other than cigars and manufactured tobacco in bond

58. (1) Goods, other than cigars and manufactured tobacco, warehoused under this Act may, without payment of duty, be transferred or removed from one bonding warehouse to another in bond, exported in bond or released from bond to accredited representatives for their personal or official use, if the transfer, removal, exportation or release is in accordance with the regulations and the ministerial regulations.

Marginal note:Removal to customs bonded warehouse or duty free shop

(2) Goods subject to excise, other than cigars and manufactured tobacco, may, without payment of duty, be removed from a bonding warehouse

(a) to a bonded warehouse, licensed as such under the Customs Tariff, if the goods are

(i) designated for delivery as ships’ stores,

(ii) for sale to accredited representatives for their personal or official use, or

(iii) for export; or

(b) to a duty free shop, licensed as such under the Customs Act, if the goods are for sale to persons who are about to leave Canada.

Marginal note:Delivery and sale to be in accordance with regulations

(3) Goods removed under subsection (2) shall be delivered and sold in accordance with any ministerial regulations that apply.

Marginal note:Definitions

58.1 (1) The definitions in this subsection apply in this section.

“foreign brand tobacco”

« tabac de marque étrangère »

“foreign brand tobacco” means tobacco in respect of which the excise tax imposed under section 23.13 of the Excise Tax Act is not payable because of section 23.3 of that Act.

“manufactured tobacco”

« tabac fabriqué »

“manufactured tobacco” does not include partially manufactured tobacco or foreign brand tobacco.

“partially manufactured tobacco”

« tabac partiellement fabriqué »

“partially manufactured tobacco” means a tobacco product made by a tobacco manufacturer that is cut filler or cut rag or that is manufactured less fully than cut filler or cut rag.

Marginal note:Categories of manufactured tobacco

(2) For the purposes of subsection (4), each of the following constitutes a category of manufactured tobacco:

(a) cigarettes;

(b) tobacco sticks; and

(c) manufactured tobacco other than cigarettes and tobacco sticks.

Marginal note:Removal of manufactured tobacco in bond

(3) Manufactured tobacco may, without payment of duty, be removed from a bonding warehouse only if

(a) it is

(i) removed by its manufacturer and exported in bond in accordance with subsection (4) and not for delivery to a foreign duty free shop or as foreign ships’ stores,

(ii) removed by its manufacturer and entered into another bonding warehouse in bond, or

(iii) released to accredited representatives for their personal or official use; and

(b) the removal and exportation, entry or release, as the case may be, are in accordance with the regulations and the ministerial regulations.

Marginal note:Maximum quantity permitted to be exported in bond

(4) A tobacco manufacturer shall not, at a particular time in a calendar year, remove a particular quantity of a category of manufactured tobacco from the manufacturer’s bonding warehouse for export in bond if the total quantity of that category of manufactured tobacco removed in the year up to that time by the manufacturer from a bonding warehouse for export in bond, plus the particular quantity, exceeds 1.5% of the total quantity of manufactured tobacco of that category manufactured by the manufacturer in the preceding calendar year.

Marginal note:Quantities to be excluded for the purpose of subsection (4)

(5) The total quantities referred to in subsection (4) shall not include any quantity of manufactured tobacco that was exported by the manufacturer for delivery to a foreign duty free shop or as foreign ships’ stores.

Marginal note:Removal of cigars in bond

(6) Cigars may, without payment of duty, be removed from a bonding warehouse only if

(a) they are

(i) removed by their manufacturer and

(A) exported in bond,

(B) entered into another bonding warehouse in bond,

(C) entered into a bonded warehouse, licensed as such under the Customs Tariff, if the person entering the cigars into the bonded warehouse certifies to the manufacturer that they are for delivery as ships’ stores in accordance with the regulations made under the Customs Tariff and the Excise Tax Act,

(D) transferred to a duty free shop, licensed as such under the Customs Act, if the operator of the duty free shop certifies to the manufacturer that the cigars are for sale to persons who are about to leave Canada, or

(E) delivered as ships’ stores in accordance with the regulations made under the Customs Tariff and the Excise Tax Act, or

(ii) released to accredited representatives for their personal or official use; and

(b) the removal and export, entry, transfer, sale, delivery or release, as the case may be, are in accordance with the regulations and the ministerial regulations.

Marginal note:Removal of partially manufactured tobacco or foreign brand tobacco in bond

(7) Partially manufactured tobacco or foreign brand tobacco may, without payment of duty, be removed by its manufacturer from a bonding warehouse only if

(a) it is entered into another bonding warehouse in bond or exported in bond and not for delivery to a foreign duty free shop or as foreign ships’ stores; and

(b) the removal and entry or export, as the case may be, are in accordance with the regulations and the ministerial regulations.

Marginal note:Diversion

(8) A person who has acquired goods that are manufactured tobacco, foreign brand tobacco or cigars is liable to pay the duty that would have been payable on the goods at the time the goods were completely manufactured, if the goods

(a) have been relieved, under this Act or otherwise, from the duty because of the purpose for which the person acquired them;

(b) are removed from a bonded warehouse licensed as such under the Customs Tariff, sold or used by the person for another purpose; and

(c) would not have been relieved from the duty if the person had acquired them for the other purpose.

Marginal note:Duty payable at time of acquisition

(9) The duty a person is liable to pay under subsection (8) on goods is deemed to have become payable by the person at the time the person acquired the goods.

(2) Subsection (1) is deemed to have come into force on April 6, 2001, except that

(a) subsections 58(1), (3) and (4) of the Act, as they read immediately before that day, apply to manufactured tobacco (as defined in section 6 of the Act) entered into a bonding warehouse before that day and are subject to subsection 58.1(4) of the Act, as enacted by subsection (1);

(b) subsections 58.1(3) and (7) of the Act, as enacted by subsection (1), do not apply to tobacco entered into a bonding warehouse before that day; and

(c) subsection 58.1(4) of the Act, as enacted by subsection (1), does not apply to tobacco exported for delivery to a foreign duty free shop or as foreign ships’ stores if it had been entered into a bonding warehouse before that day.

10. (1) The Act is amended by adding the following after section 102:

Marginal note:Penalty for removal from bonding warehouse for certain exports

102.1 Every person who removes from a bonding warehouse and exports in bond manufactured tobacco (as defined in subsection 58.1(1)) otherwise than in accordance with subparagraph 58.1(3)(a)(i) and paragraph 58.1(3)(b) is liable to pay, in addition to any duties or taxes that are payable under this or any other Act in respect of the tobacco, a penalty equal to the total of those duties and taxes, and that penalty becomes payable at the time the tobacco is exported.

(2) Subsection (1) is deemed to have come into force on April 6, 2001.

Marginal note:R.S., c. 12 (4th Supp.), s. 61

11. (1) The portion of subsection 110.1(1) of the Act before paragraph (a) is replaced by the following:

Marginal note:Penalty and interest

110.1 (1) Subject to subsection (2), on default in payment of any duty or penalty payable under this Act within the time prescribed by this Act or the regulations, the person liable to pay that duty or penalty shall pay without delay, in addition to the amount in default,

(2) Subsection (1) is deemed to have come into force on April 6, 2001.

Marginal note:1993, c. 25, s. 40; 1994, c. 37, s. 5(F); 1999, c. 17, par. 144(1)(z.7)(E)

12. Subsections 201(1) and (2) of the Act are replaced by the following:

Marginal note:Packaging and stamping of manufactured tobacco and cigars manufactured in Canada

201. (1) Before manufactured tobacco, or cigars, that are manufactured in Canada are entered for consumption under this Act,

(a) they shall be put up and prepared by their manufacturer in packages that have printed on them such information as is prescribed by the ministerial regulations; and

(b) the manufactured tobacco or cigars and their packages, cartons, boxes, crates and other containers shall be stamped with tobacco stamps or cigar stamps by the manufacturer as required by the ministerial regulations.

Marginal note:Packaging and stamping of imported manufactured tobacco and cigars

(2) Subject to subsection (3), before imported manufactured tobacco or imported cigars are released under Part II of the Customs Act,

(a) they shall be put up and prepared by the importer in packages that have printed on them such information as is prescribed by the ministerial regulations; and

(b) the manufactured tobacco or cigars and their packages, cartons, boxes, crates and other containers shall be stamped with tobacco stamps or cigar stamps by the importer as required by the ministerial regulations.

Marginal note:1994, c. 37, s. 6; 1999, c. 17, par. 144(1)(z.11)(E)

13. Section 211 of the Act is replaced by the following:

Marginal note:Stamp regulations

211. The Minister may make regulations prescribing the form of stamps to be impressed on, printed on, marked on, indented into or affixed to Canadian raw leaf tobacco, cigarettes, cigars and packages, cartons, boxes, crates and other containers containing manufactured tobacco or cigars, the information to be provided on the stamps and the manner in which the stamps are to be affixed.

Marginal note:1994, c. 37, s. 8; 1999, c. 17, par. 144(1)(z.19)(E)

14. (1) The portion of subsection 239.1(1) of the Act before paragraph (a) is replaced by the following:

Marginal note:Absence of stamps to be notice

239.1 (1) The absence of the proper tobacco stamp or cigar stamp required by this Act and the ministerial regulations to be impressed on, printed on, marked on, indented into or affixed to any cigarette or cigar or any package, carton, box, crate or other container of manufactured tobacco or cigars sold, offered for sale, kept for sale or found in the possession of any person is notice to all persons that

Marginal note:1993, c. 25, s. 52; 1995, c. 41, s. 111(1); 1999, c. 17, par. 144(1)(z.19)(E)

(2) Subparagraph 239.1(2)(a)(i) of the Act is replaced by the following:

(i) in the case of manufactured tobacco, by a licensed tobacco manufacturer for export from Canada in accordance with this Act and the ministerial regulations,

(i.1) in the case of cigars, by a licensed cigar manufacturer

(A) for export from Canada in accordance with this Act and the ministerial regulations, or

(B) as ships’ stores in accordance with the regulations made under the Customs Tariff and the Excise Tax Act,

Marginal note:1995, c. 41, s. 111(2)

(3) Clauses 239.1(2)(a)(iii)(A) and (B) of the Act are replaced by the following:

(A) the cigars were manufactured in Canada and are sold or offered for sale as ships’ stores in accordance with the regulations made under the Customs Tariff and the Excise Tax Act, or

(B) the manufactured tobacco or cigars were imported and are, in accordance with this Act, the Customs Tariff and the Customs Act, sold or offered for sale to an accredited representative, to a duty free shop licensed under the Customs Act, as ships’ stores in accordance with the regulations made under the Customs Tariff and the Excise Tax Act, to an operator of a bonded warehouse licensed under the Customs Tariff or for export, or

Marginal note:1993, c. 25, s. 52

(4) Subparagraph 239.1(2)(a)(iv) of the Act is replaced by the following:

(iv) by a person licensed under the Customs Act to operate a duty free shop, if

(A) the manufactured tobacco was imported and is sold or offered for sale in accordance with that Act to a person about to leave Canada, or

(B) the cigars are sold or offered for sale in accordance with that Act to a person about to leave Canada,

Marginal note:1995, c. 41, s. 111(3)

(5) Subparagraph 239.1(2)(b)(iv) of the Act is replaced by the following:

(iv) in the case of cigars or imported manufactured tobacco, in the possession of a person licensed under the Customs Tariff to operate a bonded warehouse or under the Customs Act to operate a sufferance warehouse or duty free shop in that warehouse or duty free shop,

Marginal note:1995, c. 41, s. 111(4)

(6) Subparagraph 239.1(2)(b)(vi) of the Act is replaced by the following:

(vi) in the case of cigars or imported manufactured tobacco, in the possession of a person as ships’ stores, if the acquisition and possession of the cigars or manufactured tobacco by that person are in accordance with the regulations made under the Customs Act, the Customs Tariff and the Excise Tax Act, or

(7) Subsections (2) to (6) are deemed to have come into force on April 6, 2001, but do not apply to manufactured tobacco entered into a bonding warehouse before that day.

Marginal note:1995, c. 41, s. 112(1)

15. (1) Paragraph 240(2)(d) of the Act is replaced by the following:

(d) in the case of cigars or imported manufactured tobacco, by a person licensed under the Customs Tariff to operate a bonded warehouse or under the Customs Act to operate a sufferance warehouse or duty free shop, in that warehouse or duty free shop;

Marginal note:1995, c. 41, s. 112(2)

(2) Paragraph 240(2)(f) of the Act is replaced by the following:

(f) in the case of cigars or imported manufactured tobacco, as ships’ stores by a person if the acquisition and possession of the cigars or manufactured tobacco by that person are in accordance with the regulations made under the Customs Act, the Customs Tariff and the Excise Tax Act; or

Marginal note:1993, c. 25, s. 52; 1995, c. 41, s. 112(3); 1999, c. 17, par. 144(1)(z.20)(E)

(3) Paragraph 240(3)(a) of the Act is replaced by the following:

(a) in the case of manufactured tobacco, by a licensed tobacco manufacturer for export from Canada in accordance with this Act and the ministerial regulations;

(a.1) in the case of cigars, by a licensed cigar manufacturer

(i) for export from Canada in accordance with this Act and the ministerial regulations, or

(ii) as ships’ stores in accordance with the regulations made under the Customs Tariff and the Excise Tax Act;

Marginal note:1995, c. 41, s. 112(4)

(4) Subparagraphs 240(3)(c)(i) and (ii) of the Act are replaced by the following:

(i) the cigars were manufactured in Canada and are sold or offered for sale as ships’ stores in accordance with the regulations made under the Customs Tariff and the Excise Tax Act, or

(ii) the manufactured tobacco or cigars were imported and are, in accordance with this Act, the Customs Act and the Customs Tariff, sold or offered for sale to an accredited representative, to a duty free shop licensed under the Customs Act, as ships’ stores in accordance with the regulations made under the Customs Tariff and the Excise Tax Act, to an operator of a bonded warehouse licensed under the Customs Tariff or for export; or

Marginal note:1993, c. 25, s. 52

(5) Paragraph 240(3)(d) of the Act is replaced by the following:

(d) by a person licensed under the Customs Act to operate a duty free shop, if

(i) the manufactured tobacco was imported and is sold or offered for sale in accordance with that Act to a person about to leave Canada, or

(ii) the cigars are sold or offered for sale in accordance with that Act to a person about to leave Canada.

(6) Subsections (1) to (5) are deemed to have come into force on April 6, 2001, but do not apply to manufactured tobacco entered into a bonding warehouse before that day.

R.S., c. E-15 EXCISE TAX ACT

Marginal note:1994, c. 29, s. 1(1)

16. (1) The definitions “Atlantic manufactured tobacco”, “black stock manufactured tobacco” and “licensed tobacco manufacturer” in subsection 2(1) of the Excise Tax Act are repealed.

(2) Subsection 2(1) of the Act is amended by adding the following in alphabetical order:

“foreign duty free shop”

« boutique hors taxes à l’étranger »

“foreign duty free shop” means a retail store that is located in a country other than Canada and that is authorized under the laws of that country to sell goods free of certain duties and taxes to individuals who are about to leave that country;

“foreign ships’ stores”

« provisions de bord à l’étranger »

“foreign ships’ stores” means tobacco products taken on board a vessel or aircraft while the vessel or aircraft is outside Canada and that are intended for consumption by or sale to the passengers or crew while the passengers and crew are on board the vessel or aircraft;

Marginal note:1994, c. 29, s. 1(2)

(3) Subsection 2(7) of the Act is repealed.

(4) Subsections (1) to (3) are deemed to have come into force on April 6, 2001.

Marginal note:1993, c. 25, s. 55(1)

17. (1) Subsection 23(1) of the Act is replaced by the following:

Marginal note:Tax on various articles at schedule rates

23. (1) Subject to subsections (6) to (8.3), whenever goods mentioned in Schedules I and II are imported into Canada or manufactured or produced in Canada and delivered to a purchaser of those goods, there shall be imposed, levied and collected, in addition to any other duty or tax that may be payable under this or any other Act or law, an excise tax in respect of the goods at the applicable rate set out in the applicable section in whichever of those Schedules is applicable, computed, if that rate is specified as a percentage, on the duty paid value or the sale price, as the case may be.

Marginal note:1993, c. 25, s. 55(2)

(2) Subsection 23(5) of the Act is replaced by the following:

Marginal note:Tax on release by duty free shop of Schedule II tobacco products

(5) Subject to section 66.1, whenever tobacco products mentioned in Schedule II are sold by the operator of a duty free shop or are retained for the use of the operator, there shall be imposed, levied and collected, in addition to any other duty or tax payable under this Act or any other Act or law, an excise tax in respect of those tobacco products at the applicable rate set out in the applicable section in that Schedule, computed, if that rate is specified as a percentage, on the duty paid value or the price at which the tobacco products were purchased by the operator, as the case may be, and payable by the operator at the time the tobacco products are delivered to the purchaser or so retained for use.

(3) Subsection 23(8) of the Act is amended by striking out the word “or” at the end of paragraph (b.1) and by adding the following after that paragraph:

(b.2) manufactured tobacco imported into Canada by an individual for their personal use if it is stamped in accordance with the Excise Act and duty has been imposed on it under section 200 of that Act; or

Marginal note:1993, c. 25, s. 55(3)

(4) Paragraph 23(8.2)(a) of the Act is replaced by the following:

(a) in the case of cigars, products in respect of which section 23.3 applies that are not exported for delivery to a foreign duty free shop or as foreign ships’ stores, or cut filler or cut rag or products manufactured less fully than cut filler or cut rag, the products have been exported in bond by their manufacturer or producer;

(a.1) in the case of products other than those to which paragraph (a) applies, the products have been exported by their manufacturer or producer;

(5) Subsections (1) to (3) are deemed to have come into force on April 6, 2001.

(6) Subsection (4) applies to tobacco products exported after April 5, 2001.

Marginal note:1994, c. 29, s. 5(1)

18. (1) Sections 23.1 and 23.2 of the Act are replaced by the following:

Definition of “tobacco product”

23.1 In sections 23.11 to 23.3, “tobacco product” means manufactured tobacco other than cut filler, cut rag or products manufactured less fully than cut filler or cut rag.

Marginal note:Tax on domestic tobacco delivered to a duty free shop or as ships’ stores

23.11 (1) There shall be imposed, levied and collected, in addition to any other duty or tax payable under this Act or any other Act or law, an excise tax, at the applicable rate set out in subsection (2), in respect of tobacco products that are manufactured or produced in Canada and are

(a) delivered to a duty free shop;

(b) delivered to a bonded warehouse, licensed as such under the Customs Tariff;

(c) delivered to a person for use as ships’ stores in accordance with the regulations made under this Act and the Customs Tariff; or

(d) exported for delivery to a foreign duty free shop or as foreign ships’ stores.

Marginal note:Rate of tax

(2) The rate of tax imposed under subsection (1) is

(a) $0.0225 per cigarette, in the case of cigarettes;

(b) $0.01665 per stick, in the case of tobacco sticks; and

(c) $11.65 per kilogram, in the case of manufactured tobacco other than cigarettes and tobacco sticks.

Marginal note:When and by whom tax is payable

(3) The tax imposed under subsection (1) is payable by the manufacturer or producer of the tobacco products and is payable at the time

(a) if paragraph (1)(d) applies, they are exported; and

(b) in any other case, they are delivered.

Marginal note:Tax on imported tobacco delivered to a duty free shop

23.12 (1) If imported tobacco products are delivered to a duty free shop, there shall be imposed, levied and collected in respect of them, in addition to any other duty or tax payable under this Act or any other Act or law, an excise tax at the rate of

(a) $0.05 per cigarette, in the case of cigarettes;

(b) $0.035 per stick, in the case of tobacco sticks; and

(c) $0.03 per gram, in the case of manufactured tobacco other than cigarettes and tobacco sticks.

Marginal note:When and by whom tax payable

(2) The tax imposed under this section is payable at the time of delivery and is payable by the operator of the duty free shop.

Marginal note:Tax on exports of tobacco products not exceeding maximum quantity

23.13 (1) If tobacco products manufactured or produced in Canada are exported in bond in accordance with subparagraph 58.1(3)(a)(i) and paragraph 58.1(3)(b) of the Excise Act by their manufacturer or producer, there shall be imposed, levied and collected in respect of the tobacco products, in addition to any other duty or tax payable under this Act or any other Act or law, an excise tax at the rate of

(a) $0.05 per cigarette, in the case of cigarettes;

(b) $0.035 per stick, in the case of tobacco sticks; and

(c) $30.00 per kilogram, in the case of manufactured tobacco other than cigarettes and tobacco sticks.

Marginal note:Tax on exports of tobacco products exceeding maximum quantity

(2) If tobacco products manufactured or produced in Canada are exported and subsection (1) does not apply to those products, there shall be imposed, levied and collected in respect of those products, in addition to any other duty or tax payable under this Act or any other Act or law, an excise tax at the rate of

(a) $0.0825 per cigarette, in the case of cigarettes;

(b) $0.06165 per stick, in the case of tobacco sticks; and

(c) $41.65 per kilogram, in the case of manufactured tobacco other than cigarettes and tobacco sticks.

Marginal note:When and by whom tax is payable

(3) The tax imposed under this section is payable at the time the tobacco products are exported and is payable by

(a) if subsection (1) applies, the manufacturer or producer of the products; and

(b) if subsection (2) applies, the exporter of the products.

Marginal note:Tax not payable on exports to foreign duty free shops or as foreign ships’ stores

(4) The tax imposed under this section is not payable in respect of tobacco products that are exported by their manufacturer or producer for delivery

(a) to a foreign duty free shop for sale in the shop; or

(b) as foreign ships’ stores.

(2) Subsection (1) is deemed to have come into force on April 6, 2001, except that section 23.11 of the Act, as enacted by subsection (1), does not apply to tobacco products that had been entered into a bonding warehouse before that day.

Marginal note:2000, c. 30, s. 3(1)

19. (1) Subsection 23.21(2) of the Act is replaced by the following:

Marginal note:Exemption for limited exports

(2) The excise tax imposed under subsection 23.2(1) is not payable by a manufacturer or producer in respect of a particular quantity of a category of tobacco product exported at a time in a calendar year if the total quantity of that category of tobacco product exported by the manufacturer or producer in the calendar year up to and including that time, plus the particular quantity, does not exceed 1 1/2% of the total quantity of that category of tobacco product manufactured or produced by the manufacturer or producer in the preceding calendar year.

(2) Section 23.21 of the Act, as amended by subsection (1), is repealed.

(3) Subsection (1) is deemed to have come into force on April 1, 2000, except that, in applying subsection 23.21(2) of the Act, as enacted by subsection (1), before January 2001, the reference in that subsection to “1 1/2%” shall be read as a reference to “1 3/4%”.

(4) Subsection (2) is deemed to have come into force on April 6, 2001.

Marginal note:1997, c. 26, s. 60(1)

20. (1) Section 23.22 of the Act is repealed.

(2) Subsection (1) is deemed to have come into force on April 6, 2001.

Marginal note:1993, c. 25, s. 56

21. (1) The portion of subsection 23.3(1) of the Act before paragraph (a) is replaced by the following:

Marginal note:Exemption for prescribed tobacco product

23.3 (1) The excise tax imposed under section 23.13 is not payable in the case of a tobacco product of a particular brand that is manufactured or produced in Canada and exported from Canada, if

Marginal note:1993, c. 25, s. 56

(2) The portion of subsection 23.3(2) of the Act before paragraph (a) is replaced by the following:

Marginal note:Exemption for prescribed cigarettes

(2) The excise tax imposed under section 23.13 is not payable in the case of cigarettes of a particular type or formulation, manufactured or produced in Canada and exported under a brand that is also applied to cigarettes of a different type or formulation that are manufactured or produced in Canada and sold in Canada, if

(3) Subsections (1) and (2) are deemed to have come into force on April 6, 2001.

Marginal note:1994, c. 29, s. 6(1); 1997, c. 26, s. 61; 2000, c. 30, s. 4

22. (1) Section 23.31 of the Act is replaced by the following:

Marginal note:Tax on cigarettes sold to purchaser not authorized to resell in Ontario

23.31 (1) An excise tax shall be imposed, levied and collected on cigarettes that are

(a) marked or stamped in accordance with a statute of the Province of Ontario to indicate that they are intended for retail sale in the province; and

(b) sold by their manufacturer or producer, or by a person who is authorized under a statute of the province to sell cigarettes in the province, to a purchaser who is not authorized under a statute of the province to sell cigarettes in the province.

Marginal note:Where tax not imposed

(2) Tax shall not be imposed under subsection (1) if the purchaser referred to in that subsection is a consumer in the Province of Ontario and the purchase is for consumption by the purchaser or by others at the expense of the purchaser.

Marginal note:When and by whom tax is payable

(3) The tax imposed under subsection (1) is payable by the person selling the cigarettes to the purchaser referred to in that subsection and is payable at the time of the sale.

Marginal note:Amount of tax

(4) The tax imposed on cigarettes under subsection (1) is equal to the amount by which

(a) the excise tax that would have been imposed under section 23 in respect of the cigarettes if the applicable rate of excise tax had been the rate set out in paragraph 1(f) of Schedule II

exceeds

(b) the excise tax that was imposed under section 23 in respect of the cigarettes.

(2) Subsection (1) is deemed to have come into force on April 6, 2001.

Marginal note:1997, c. 26, s. 62(2); 2000, c. 30, ss. 5(1) and (2)(F)

23. (1) Subsections 23.32(1) and (2) of the Act are replaced by the following:

Marginal note:Tax on cigarettes sold to purchaser not authorized to resell in Quebec

23.32 (1) An excise tax shall be imposed, levied and collected on cigarettes that are

(a) marked or stamped in accordance with a statute of the Province of Quebec to indicate that they are intended for retail sale in that province; and

(b) sold by their manufacturer or producer, or by a person who is authorized under a statute of the province to sell manufactured tobacco in the province, to a purchaser who is not authorized under a statute of the province to sell manufactured tobacco in the province.

Marginal note:Where tax not imposed

(2) Tax shall not be imposed under subsection (1) if the purchaser referred to in that subsection is a consumer located in the Province of Quebec and the purchase is for consumption by the purchaser or by others at the expense of the purchaser.

(2) Subsection (1) is deemed to have come into force on April 6, 2001.

Marginal note:1994, c. 29, s. 6(1); 1995, c. 36, ss. 2, 3(1) and 4; 1997, c. 26, ss. 63 and 64; 2000, c. 30, ss. 6(2) and 7(1), (2)(F) and (3) and par. 140(1)(a)

24. (1) Sections 23.33 to 23.341 of the Act are repealed.

(2) Subsection (1) is deemed to have come into force on April 6, 2001.

Marginal note:2000, c. 30, s. 8(1)

25. (1) Subsections 23.35(2) and (3) of the Act are replaced by the following:

Marginal note:Tax on excess sale of black stock cigarettes

(2) If a supplier sells to an on-reserve retailer a quantity of black stock cigarettes in respect of which subparagraph 1(a)(ii) of Schedule II applies that exceeds the quantity of black stock cigarettes that the on-reserve retailer is authorized under the Tobacco Tax Act, R.S.O. 1990, c. T.10, to purchase, an excise tax shall be imposed, levied and collected on those excess cigarettes.

Marginal note:Tax on illegal sale of black stock cigarettes

(3) If a supplier sells to a person, other than an Indian consumer in Ontario or an on-reserve retailer, black stock cigarettes in respect of which subparagraph 1(a)(ii) of Schedule II applies, an excise tax shall be imposed, levied and collected on those cigarettes.

Marginal note:1994, c. 29, s. 6(1); 2000, c. 30, s. 8(2)

(2) Subsection 23.35(5) of the Act is replaced by the following:

Marginal note:Amount of tax

(5) The tax imposed on black stock cigarettes under subsection (2) or (3) is equal to the amount by which

(a) the excise tax that would have been imposed under section 23 in respect of those cigarettes if the applicable rate of excise tax had been the rate set out in paragraph 1(f) of Schedule II

exceeds

(b) the excise tax that was imposed under section 23 in respect of those cigarettes.

(3) Subsections (1) and (2) are deemed to have come into force on April 6, 2001.

Marginal note:1994, c. 29, s. 6(1); 1997, c. 26, s. 66; 2000, c. 30, paras. 140(1)(b) and (c)

26. (1) Section 23.36 of the Act is repealed.

(2) Subsection (1) is deemed to have come into force on April 6, 2001.

Marginal note:1994, c. 29, s. 7(1); 1995, c. 36, s. 6; 1997, c. 26, ss. 67(1) and 68; 1998, c. 21, s. 81(1); 2000, c. 30, s. 13 and paras. 140(1)(a), (d) and (e)

27. (1) Sections 68.161 to 68.169 of the Act are repealed.

(2) Subsection (1) is deemed to have come into force on April 6, 2001.

28. (1) The Act is amended by adding the following after section 68.17:

Marginal note:Rebate of tax to importer if foreign taxes paid

68.171 (1) The Minister may pay, to a person who has imported into a foreign country tobacco products (as defined in section 23.1) that were manufactured or produced in Canada and exported in bond by their manufacturer or producer to the foreign country in accordance with subparagraph 58.1(3)(a)(i) and paragraph 58.1(3)(b) of the Excise Act, a rebate determined in accordance with subsection (2) in respect of the products if

(a) the person provides evidence satisfactory to the Minister that

(i) all taxes and duties imposed on the products under the laws of the foreign country having national application have been paid, and

(ii) the products were marked in accordance with section 202 of the Excise Act; and

(b) the person applies to the Minister for the rebate within two years after the products were exported to the foreign country.

Marginal note:Determination of rebate

(2) The amount of the rebate under subsection (1) is equal to the lesser of

(a) the total of the taxes and duties referred to in subparagraph (1)(a)(i) that are paid in respect of the tobacco products, and

(b) the amount of the tax imposed under subsection 23.13(1) in respect of the tobacco products that is paid by their manufacturer or producer.

Marginal note:Overpayment of rebate or interest

(3) If an amount has been paid to a person as a rebate under subsection (1) in respect of tobacco products exported by their manufacturer or producer or as interest in respect of such a rebate and tax under subsection 23.13(2) was imposed in respect of those products, the amount is deemed to be an amount of tax payable under Part III by the manufacturer or producer that became payable on the last day of the first month following that in which the amount was paid to the person.

Marginal note:Refund of tax to manufacturer if foreign taxes paid

(4) If a rebate under subsection (1) has been paid in respect of exported tobacco products, the Minister may refund to the manufacturer or producer of the products the amount, if any, by which the tax imposed under subsection 23.13(1) in respect of the products and paid by the manufacturer or producer exceeds the amount of the rebate if the manufacturer or producer applies to the Minister for the refund within two years after the tobacco products were exported.

Marginal note:Refund of tax to operator of duty free shop

68.172 (1) Subject to subsection (2), if the operator of a duty free shop provides evidence satisfactory to the Minister that the operator has sold imported tobacco products (as defined in section 23.1) in accordance with the regulations made under the Customs Act to an individual who is not a resident of Canada and that the products were exported at any time, the Minister may refund to the operator the tax paid under section 23.12 in respect of that portion of the total quantity of the products sold by the operator to the individual and exported at that time that does not exceed

(a) in the case of cigarettes, 200 cigarettes;

(b) in the case of tobacco sticks, 200 sticks; and

(c) in the case of manufactured tobacco other than cigarettes and tobacco sticks, 200 grams.

Marginal note:Application

(2) No refund shall be paid under subsection (1) to the operator of a duty free shop in respect of a sale of tobacco unless the operator applies to the Minister for the refund within two years after the sale.

(2) Subsection (1) is deemed to have come into force on April 6, 2001.

29. (1) Section 68.18 of the Act is amended by adding the following after subsection (3):

Marginal note:Exception for tobacco products

(3.1) Subsection (2) does not apply in respect of taxes imposed under Part III on tobacco products mentioned in Schedule II.

(2) Subsection (1) is deemed to have come into force on April 6, 2001.

Marginal note:1994, c. 29, s. 8(1)

30. (1) Subsections 72(2) and (3) of the Act are replaced by the following:

Marginal note:Form and contents of application

(2) An application shall be made in the prescribed form and contain the prescribed information.

Marginal note:Filing of application

(3) An application shall be filed with the Minister in any manner that the Governor in Council may, by regulation, prescribe.

Marginal note:1994, c. 29, s. 8(2)

(2) Subsection 72(7) of the Act is replaced by the following:

Marginal note:Interest on payment

(7) If an amount is paid to an applicant under subsection (6), interest at the prescribed rate shall be paid in respect of each day between the day that is sixty days after the day on which the application was received by the Minister and the day on which the payment is sent, and compounded monthly on the total amount of the payment and interest outstanding.

(3) Subsections (1) and (2) are deemed to have come into force on April 6, 2001.

Marginal note:1997, c. 26, s. 69(1)

31. (1) Subsection 74(1) of the Act is replaced by the following:

Marginal note:Deductions of tax, other than Part I tax, where application

74. (1) In lieu of making a payment, other than a payment in respect of Part I, pursuant to an application under any of sections 68 to 68.11 or 68.17 to 69, the Minister may, on request of the applicant, authorize the applicant to deduct, on such terms and conditions and in such manner as the Minister may specify, the amount that would otherwise be paid to the applicant from the amount of any payment or remittance of tax, penalty, interest or other sum that is reported in a return under section 78 by the applicant.

(2) Subsection (1) is deemed to have come into force on April 6, 2001.

Marginal note:R.S., c. 15 (1st Supp.), s. 26(1), c. 7 (2nd Supp.), s. 35(1)

32. (1) Subsections 78(1) and (2) of the Act are replaced by the following:

Marginal note:Monthly returns

78. (1) Every person who is required to pay tax under Part III or IV shall make each month a return in the prescribed form containing prescribed information of all amounts that became payable by the person on account of that tax in the preceding month.

Marginal note:Nil returns

(2) Every person who holds a licence granted under or in respect of Part III or IV and whose tax payable under Parts III and IV in the preceding month is nil shall make a return as required by subsection (1) reporting that fact.

Marginal note:R.S., c. 12 (4th Supp.), s. 31(1)

(2) Paragraph 78(3)(c) of the Act is replaced by the following:

(c) authorize any person whose activities that give rise to tax payable by the person under Part III or IV are predominantly limited to a seasonal period of operation to make a return in respect of any period longer than one month but not longer than six months, if the total tax payable by the person under Parts III and IV for the equivalent period in the preceding calendar year did not exceed an average of four hundred dollars per month throughout that equivalent period.

Marginal note:R.S., c. 15 (1st Supp.), s. 26(1)

(3) Paragraph 78(4)(a) of the Act is replaced by the following:

(a) in a case where the return is required to be made in a month in accordance with subsection (1) or (2), not later than the last day of that month;

(4) Subsections (1) to (3) are deemed to have come into force on April 6, 2001.

Marginal note:1994, c. 29, s. 9(1)

33. (1) Subsections 81.38(8) and (8.1) of the Act are replaced by the following:

Marginal note:Interest on refunds

(8) If a payment is made under subsection (1) or (4) in respect of an application under any of sections 68 to 69, interest at the prescribed rate shall be paid, in respect of each day between the day that is sixty days after the day on which the application was received by the Minister and the day on which the payment was sent, and compounded monthly on the total amount of the payment and interest outstanding.

(2) Subsection (1) is deemed to have come into force on April 6, 2001.

Marginal note:1994, c. 29, s. 10; 2000, c. 30, s. 15(1)

34. (1) Section 97.1 of the Act is replaced by the following:

Marginal note:Offence of selling in another province cigarettes marked for sale in Ontario

97.1 If cigarettes have been marked or stamped in accordance with a statute of the Province of Ontario to indicate that they are intended for sale in that province, every person who sells or offers for sale the cigarettes to a consumer in any other province is guilty of an offence and is liable on summary conviction to a fine of not less than $1,000 and not more than the greater of $1,000 and triple the amount by which

(a) the excise tax that would have been imposed under section 23 in respect of the cigarettes if the applicable rate of excise tax had been the rate set out in paragraph 1(f) of Schedule II

exceeds

(b) the excise tax that was imposed under section 23 in respect of the cigarettes.

(2) Subsection (1) is deemed to have come into force on April 6, 2001.

Marginal note:2000, c. 30, s. 16(1)

35. (1) The portion of section 97.2 of the Act before paragraph (b) is replaced by the following:

Marginal note:Offence of selling in another province cigarettes marked for sale in Quebec

97.2 If cigarettes have been marked or stamped in accordance with a statute of the Province of Quebec to indicate that they are intended for sale in that province, every person who sells or offers for sale the cigarettes to a consumer in any other province is guilty of an offence and is liable on summary conviction to a fine of not less than $1,000 and not more than the greater of $1,000 and triple the amount by which

(a) the excise tax that would have been imposed under section 23 in respect of the cigarettes if the applicable rate of excise tax had been the rate set out in paragraph 1(f) of Schedule II

exceeds

(2) Subsection (1) is deemed to have come into force on April 6, 2001.

Marginal note:1997, c. 26, s. 72(1)

36. (1) Section 97.3 of the Act is repealed.

(2) Subsection (1) is deemed to have come into force on April 6, 2001.

Marginal note:1994, c. 29, s. 10; 1997, c. 26, s. 73(1); 2000, c. 30, s. 17(1) and par. 140(1)(b)

37. (1) Sections 97.4 and 97.5 of the Act are replaced by the following:

Marginal note:Offence of unauthorized sale of cigarettes intended for Indian reserve

97.4 Every person who sells or offers for sale black stock cigarettes described in subparagraph 1(a)(ii) of Schedule II in respect of which tax under section 23 was imposed at the rate set out in paragraph 1(a) of that Schedule to a person other than a supplier, an on-reserve retailer or an Indian consumer in the Province of Ontario is guilty of an offence and liable on summary conviction to a fine of not less than $1,000 and not more than the greater of $1,000 and triple the amount by which

(a) the excise tax that would have been imposed under section 23 in respect of the cigarettes if the applicable rate of excise tax had been the rate set out in paragraph 1(f) of Schedule II

exceeds

(b) the excise tax that was imposed under section 23 in respect of the cigarettes.

(2) Subsection (1) is deemed to have come into force on April 6, 2001.

Marginal note:1994, c. 29, s. 11(1); 1999, c. 17, s. 156(c)

38. (1) Section 98.2 of the Act is repealed.

(2) Subsection (1) is deemed to have come into force on April 6, 2001.

Marginal note:1994, c. 29, s. 12

39. (1) Subsection 100(5) of the Act is replaced by the following:

Marginal note:Failure to make records and books available

(5) Every person who fails to comply with section 98.1 is guilty of an offence and liable on summary conviction to a fine of not less than $200 and not more than $2,000 or to imprisonment for a term of not more than 6 months or to both the fine and imprisonment.

(2) Subsection (1) is deemed to have come into force on April 6, 2001.

Marginal note:2000, c. 30, s. 107(1)

40. (1) The portion of paragraph 1(a) of Schedule II to the Act before subparagraph (i) is replaced by the following:

(a) $0.13138 for each five cigarettes or fraction of five cigarettes contained in any package, if

Marginal note:2000, c. 30, s. 107(2)

(2) Paragraph 1(b) of Schedule II to the Act is replaced by the following:

(b) $0.12138 for each five cigarettes or fraction of five cigarettes contained in any package, if the cigarettes are marked or stamped in accordance with the Tobacco Tax Act, R.S.Q. 1977, c. I-2, to indicate that the cigarettes are intended for retail sale in the Province of Quebec; and

Marginal note:1994, c. 29, s. 14(1); 1997, c. 26, ss. 74(3) and (4); 2000, c. 30, ss. 107(3) to (5) and par. 140(1)(f)

(3) Paragraphs 1(c) to (e) of Schedule II to the Act are repealed.

(4) Subsections (1) to (3) are deemed to have come into force on April 6, 2001.

Marginal note:1994, c. 29, s. 14(1); 1997, c. 26, s. 76(1); 2000, c. 30, s. 108(1)

41. (1) Sections 2 and 3 of Schedule II to the Act are replaced by the following:

2. Tobacco sticks: $0.01965 per stick.

3. Manufactured tobacco other than cigarettes and tobacco sticks: $15.648 per kilogram.

(2) Subsection (1) is deemed to have come into force on April 6, 2001.

42. (1) Schedule VII to the Act is amended by adding the following after section 1:

1.1 For the purposes of section 1, “duty” does not include a duty levied under subsection 21(2) of the Customs Tariff.

(2) Subsection (1) comes into force or is deemed to have come into force on October 1, 2001.

R.S., c. 1 (5th Supp.) INCOME TAX ACT

43. (1) Subsection 182(1) of the Income Tax Act is replaced by the following:

Marginal note:Surtax

182. (1) Every corporation shall pay a tax under this Part for each taxation year equal to 50% of the corporation’s Part I tax on tobacco manufacturing profits for the year.

(2) Subsection (1) applies to taxation years ending after April 5, 2001, except that, in its application to a corporation’s taxation year that includes that day, subsection 182(1) of the Act, as enacted by subsection (1), shall be read as follows:

182. (1) Every corporation shall pay a tax under this Part for the corporation’s taxation year that includes April 5, 2001, equal to the total of

(a) 40% of that proportion of the corporation’s Part I tax on tobacco manufacturing profits for the year that the number of days in the year that are before April 6, 2001, is of the total number of days in the year, and

(b) 50% of that proportion of the corporation’s Part I tax on tobacco manufacturing profits for the year that the number of days in the year that are after April 5, 2001, is of the total number of days in the year.

APPLICATION

44. For the purposes of applying the provisions of the Customs Act, the Excise Act and the Excise Tax Act that provide for the payment of, or liability to pay, interest in respect of any amount, the amount shall be determined and interest shall be computed on it as though this Act had been assented to on April 6, 2001.
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