Ontario Tax Bulletin TT 5-2001, June 2001
The information in this bulletin does not replace the law found in the Tobacco Tax Act and related Regulations.
Ontario Tax Bulletin TT 1-2001 Cigar Tax Changes, issued February 2001, stated the details of the upcoming changes to the tax on cigars.
Ontario Tax Bulletin TT 4-2001 Cigar Tax Changes, issued May 2001 stated that the effective date of the changes would be August 1, 2001. It also explained that where the taxable price of a cigar includes a prescribed percentage, that percentage would be 22%.
This bulletin deals with remaining issues that are a result of changes to cigar tax.
Invoices
Every wholesaler (i.e. a person who sells cigars for resale) must provide an invoice to every person to whom the wholesaler sells cigars. The invoice must include the following information:
- name and address of vendor;
- price of purchase by retailer* of "each cigar";
- the prescribed percentage (now 22%);
- the amount of tax charged for each cigar;
- quantity of "each cigar" purchased by a retail dealer; and
- the date of purchase.
* The "price of purchase by retailer" includes all consideration given by the retailer of the cigar as well as federal excise, federal duty excluding GST, and all costs and charges relating to mailing, delivery and transportation.
Retailers are required (by invoice or other reasonable means) to inform purchasers of the amount of Ontario cigar tax.
Refunds on Tax Paid Cigar Inventory
Where tax has been paid on cigars held in inventory by a dealer as of midnight July 31, 2001, a refund may be available as a result of the cigar tax changes.
Existing Tobacco Tax Collectors
Existing designated tobacco tax collectors on the purchase based reporting method (these collectors will have a Remittance Agreement with the Minister) may claim a refund equal to the amount of tax that has been paid on the cigars in inventory. The amount claimed should be shown as an adjustment on the collector's return for July, 2001. This return is due on August 28, 2001.
Non-collector Wholesalers
Non-collector wholesalers (these wholesalers will have a wholesale dealer's permit) who have become designated cigar tax collectors may claim an amount equal to the tax the wholesaler has paid on the cigars in inventory. The amount claimed should be shown as an adjustment on the wholesaler's cigar tax collector return for August, 2001. This return is due on September 10, 2001.
Retailers
If the amount of tax retailers have paid to their supplier(s) on the cigars held in inventory is greater than the amount of tax that will be due under the cigar tax changes, retailers may claim a refund.
Refund Applications
All refund applications must be:
- received by the ministry no later than August 31, 2002; and
- supported by a physical inventory of cigars taken as of 00:01 a.m., August 1, 2001.
No interest is payable on the refund amount. All refund applications are subject to audit, and penalties may be imposed for failure to comply. Supporting documentation must be retained by the applicant. The refund application forms will be available in early July, 2001.
If you do not receive the application form, please call the Client Accounts and Services Branch number or check the Ministry website, both listed at the end of this bulletin.
Compliance
Wholesalers, manufacturers and importers dealing in cigars (including those already designated as tobacco tax collectors) are required to be designated as a cigar tax collector before August 1, 2001. This will facilitate the tax exempt purchase and sale of cigars among cigar tax collectors.
Failure of a person wholesaling cigars to become designated as a cigar tax collector may lead to the Minister suspending or cancelling your wholesaler's permit, which would prohibit you from selling or delivering in Ontario tobacco for resale. Others are prohibited from purchasing or taking delivery of tobacco from you if you do not have a subsisting wholesaler's permit. There are fines and penalties for breaching the prohibitions.
Retailers may only purchase cigars from designated cigar tax collectors.
Retailers must not wholesale tobacco products (e.g. sales to golf courses) unless they hold a wholesaler's permit.
General Information
If this bulletin does not completely address your particular situation, refer to the Tobacco Tax Act and related Regulations, or contact the:
Ministry of Revenue
Client Accounts and Services Branch
Tobacco Tax Program
33 King Street West
PO Box 625
Oshawa ON L1H 8H9
- 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, are available online at ontario.ca/revenue
ISBN 0-7794-1532-9
© Queen's Printer for Ontario, 2001
