Tax Bulletin TT 1-2006, January 2006
- On January 31, 2006, the Minister of Finance announced an increase in tobacco tax rates, to be effective at midnight.
- Wholesalers are required to complete Tobacco Products Inventory Reports.
- The information in this bulletin does not replace the law found in the Tobacco Tax Act and related Regulations.
Tobacco Tax Rate Increases
Regulation to Increase Tobacco Tax Rates
On January 31, 2006, the Minister of Finance announced an increase in tobacco tax rates as of 12:01 a.m., February 1, 2006. The increase was implemented by a regulation made by the Minister under the Tobacco Tax Act.
As of February 1, 2006, Ontario's tax rates for cigarettes and cut tobacco increased from 11.725 cents to 12.35 cents per cigarette and from 11.725 cents to 12.35 cents per gram of cut tobacco. The tax rate for cigars remains unchanged at 56.6% of the taxable price. The following is a summary of the old and new rates:
| New Rate | Old Rate | Increase | |
|---|---|---|---|
| Cigarettes Per cigarette/cigarette stick |
$0.1235 | $0.11725 | $0.00625 |
| Cut Tobacco Per Gram or Part Gram of Coarse/Fine Cut, Snuff, Chewing Tobacco and Raw Leaf Tobacco |
$0.1235 | $0.11725 | $0.00625 |
| Cigars | 56.6% of taxable price |
56.6% of taxable price |
no change |
Effective Date of Rate Increases
The tobacco tax rate increases are effective February 1, 2006.
Tobacco wholesalers are expected to collect and remit tobacco tax at the new rates on and after February 1, 2006.
Inventory Requirements - Wholesalers Only
Tobacco Products Inventory Report
To ensure compliance with the regulation, wholesalers of tobacco products are required to take an inventory of all cigarettes and cut tobacco held as of 12:01 a.m., February 1, 2006 and remit to the Minister of Finance the additional tobacco tax on that inventory, based on the difference between the old and new tax rates. In order to calculate the additional tax, the wholesaler must complete a Tobacco Products Inventory Report.
As an exception, wholesalers who have been designated by the Minister of Finance as Tobacco Tax Collectors and who calculate and remit tobacco tax based on actual sales are not subject to the inventory requirements.
Due Date
Tobacco Products Inventory Reports and payment of the additional tax are to be delivered to the Ministry of Revenue, on or before February 28, 2006.
Tobacco Products to be Included in the Inventory Report
All tobacco products, except cigars, must be counted and included in the Tobacco Products Inventory Report. More specifically, if you are a wholesaler of tobacco products, you must include in your Inventory Report:
All Ontario-marked cigarettes, tobacco sticks, coarse or fine cut tobacco, snuff, chewing tobacco and raw leaf tobacco stored in your retail outlets, store display areas, store rooms, warehouses, cash and carry outlets, delivery trucks or any other location where tobacco products are stored.
Undelivered Tobacco Products
All tobacco products (other than cigars) ordered or sold, but not delivered before 12:01 a.m., February 1, 2006, must be included in the Inventory Report of the wholesaler who took the order or made the sale.
Consolidated Inventory Report
Wholesalers who have tobacco products at more than one location should consolidate their tobacco products inventory onto a single Tobacco Products Inventory Report.
Five Per Cent Compensation
As compensation for compiling the inventory and remitting the additional tax, the wholesaler may deduct an amount of five per cent from the additional tax amount. However, no deduction may be made if the wholesaler fails to deliver the inventory report or remit the additional tax by the due date of February 28, 2006.
Supporting Documents
Documentation in support of the Inventory Report must be maintained for a period of seven years.
Additional Information
To obtain a Tobacco Products Inventory Report, or for help in completing the Report, please contact the Ministry of Revenue by phone at 1 866 ONT-TAXS (1 866 668-8297), or by fax at 905 433-5680.
For information on other Ministry of Revenue programs, please call one of the following numbers:
- Toll-free: 1 866 ONT-TAXS (1 866 668-8297)
- Fax: 905 433-5680
- Teletypewriter (TTY): 1 800 263-7776
This publication and various other English and French tax bulletins published by the Ministry of Revenue may be obtained online at ontario.ca/revenue.
The Tobacco Tax Act and Ontario's other public statutes and regulations may be obtained online at ontario.ca/e-laws.
ISBN 1-4249-0026-3
© Queen's Printer for Ontario, 2006
