Highlights from the 2004 Ontario Budget - Enhanced Regulatory Enforcement Provisions under the Tobacco Tax Act
Tax Bulletin TT 6-2004, revised June 2004
Highlights of Changes
- The minimum fine for a number of offences has increased to $500 or $1,000 depending on the offence. The maximum fines for certain offences have also increased.
- Persons who are involved in certain regulated tobacco activities without the authority of the Minister of Revenue are liable to fines, penalties and increased sanctions for repeat offences.
- The tables following summarize the enhancements to the regulatory and enforcement provisions of the Tobacco Tax Act (the Act).
Tax Rate Increase
- Tobacco tax rates increased to 11.10 cents per cigarette, tobacco stick, and each gram or part thereof of tobacco, as of 12:01 a.m. Wednesday, May 19, 2004. See Tax Bulletin TT 5-2004 - Important Notice Concerning Changes to Tobacco Tax Rates for further details.
- The information in this bulletin does not replace the law found in the Act and related Regulations.
General
Enhancement of Regulatory and Enforcement Provisions
The Ontario tobacco marketplace is affected by unregulated contraband tobacco and unauthorized distribution activities. In order to minimize the availability of such tobacco, especially to youth, and to protect tobacco tax revenue, a number of enhancements to the regulatory and enforcement provisions of the Act were announced in the 2004 Ontario Budget.
Effective Date of Legislation
The tax rate increase to 11.10 cents was effective as of 12:01 a.m. Wednesday, May 19, 2004. The regulatory and enforcement measures are effective June 17, 2004.
Increased (
) or New (
) Fines and Penalties
An asterisk (*) denotes that the tobacco is subject to forfeiture.
The following charts provide summaries of the enhancements enacted to the regulatory and enforcement provisions of the Act.
| Offence | Fine Upon Conviction |
|---|---|
| Knowingly fail to pay tax | minimum - $500 maximum - three times the tax |
| Retail dealer fails to collect and remit tax | minimum - $1,000 maximum - $50,000 |
| Operate as a wholesaler without a permit | minimum - $1,000 plus not less than three times the tax maximum - $10,000 plus not less than three times the tax |
| Wholesaler contravenes condition or restriction of permit, or any related requirement | minimum - $1,000 maximum - $10,000 |
| Collector, importer, wholesaler, retail dealer refuse or neglect to collect tax as required by the Act | an amount equal to the tax not collected plus not less than $1,000 or more than $10,000 |
| Import or export without a registration certificate |
minimum - $1,000 plus not less than three times the tax maximum - $10,000 plus not less than three times the tax |
| Importer or exporter contravenes condition or restriction of permit, or any related requirement | minimum - $1,000 maximum - $10,000 |
| Purchase or receive tobacco from an unregistered importer | minimum - $500 plus three times the tax maximum - $10,000 plus three times the tax |
| Manufacture tobacco products without a registration certificate | minimum - $1,000 plus not less than three times the tax maximum - $10,000 plus not less than three times the tax |
| Registered manufacturer contravenes permit or related provisions | minimum - $1,000 maximum - $10,000 |
| Mark or stamp cigarettes without a permit | minimum - $1,000 plus not less than three times the tax maximum - $10,000, plus not less than three times the tax |
| Marker or stamper of cigarettes contravenes permit or any related requirement | minimum - $1,000 maximum - $10,000 |
| Fail to deliver a return | minimum - $500 maximum - $5000 |
| Fail to complete the information required in a return | minimum - $500 maximum - $5000 |
| Fail to pay over or remit tax as required | minimum - 25 % of the tax maximum - three times the tax |
| Tobacco Subject to Forfeiture on the following: | |
| * Except as authorized, purchase, receive, or possess unmarked cigarettes for the purpose of sale | minimum - $500 plus not less than three times the tax maximum - $10,000, plus not less than three times the tax |
| * Except as authorized, possess more than 200 unmarked cigarettes |
minimum - $500 plus not less than three times the tax maximum - $10,000, plus not less than three times the tax |
| * Wholesale unmarked cigarettes - no permit | minimum - tax payable maximum - three times the tax or up to two years imprisonment |
| * Wholesale marked cigarettes - no permit | $4 for each 200 cigarettes |
| * Repeat offence - marked cigarettes - no permit |
$4 for each 200 cigarettes, up to six months imprisonment, or both |
| * Repeat offence - Wholesale tobacco other than cigarettes - no permit |
minimum - $1,000, maximum - $50,000, up to six months imprisonment, or both |
| * Purchase or receive for resale from other than a registered wholesaler | unmarked cigarettes: minimum - the tax payable, maximum - three times the tax , or up to two years imprisonment;marked cigarettes: $4 for each 200 cigarettes other tobacco: minimum - $1,000, maximum - $50,000 |
| * Repeat offence - purchase or receive marked cigarettes for resale from other than a registered wholesaler |
$4 for each 200 cigarettes, up to six months imprisonment, or both |
| * Repeat offence - purchase or receive tobacco other than cigarettes for resale from other than a registered wholesaler |
minimum - $1,000, maximum - $50,000, up to six months imprisonment, or both |
| * Deliver, store, transport or possess tobacco in bulk acquired from or owned by a person not authorized |
unmarked cigarettes: minimum - the tax payable, maximum - three times the tax, or up to two years imprisonment; marked cigarettes: $4 for each 200 cigarettes; other tobacco: minimum - $1,000, maximum - $50,000 |
| * Repeat Offence - deliver, store, transport or possess tobacco in bulk acquired from or owned by a person not authorized |
marked cigarettes: $4 for each 200 cigarettes and up to six months imprisonment |
| * Repeat offence - deliver, store, transport or possess tobacco in bulk acquired from or owned by a person not authorized |
other tobacco (not cigarettes): minimum - $1,000, maximum - $50,000 and up to six months imprisonment |
Increased () or New () Penalties
| Contravention | Civil Penalty Assessed |
|---|---|
| Knowingly fail to pay tax |
three times the tax |
| Import or export tobacco without a registration certificate |
an amount equal to the tax |
| Sell or keep for sale unmarked cigarettes | three times the tax |
| Except as authorized, possess more than 200 unmarked cigarettes |
three times the tax |
| Sell, offer for sale, keep for sale, purchase or receive for sale, 10,000 or more unmarked cigarettes | an additional five times the tax |
| Possess 10,000 or more unmarked cigarettes | an additional five times the tax |
| Sell tobacco at wholesale - no permit | minimum $1,000 - maximum $10,000 plus three times the tax on every cigarette and every gram of other tobacco sold , plus 170% of the price at which each cigar sold |
| Cigarette marker, stamper, or dealer possess cigarettes in a package, carton or case fraudulently marked or previously used for marked cigarettes | first assessment - three times the tax subsequent assessment - five times the tax |
| Purchase for resale from other than registered wholesaler, or store, deliver, transport or possess tobacco acquired from or owned by a person who is not registered as a wholesaler |
minimum $500 - maximum $10,000 plus for: cigarettes - three times the tax; other tobacco - three times the tax; cigars - 170% of the purchase price |
Other Changes
Security
The Minister is required to demand security from collectors, importers, exporters and permit holders under the Act.
Possession of Unmarked Cigarettes
Unless authorized under the Act or Regulations, no person is permitted to possess more than 200 unmarked cigarettes¹. Contravention may result in the fines, penalties and possibility of increased sanctions as described previously in the charts.
¹ Unmarked cigarettes" do not have the yellow Ontario tear strip with the words "ONTARIO – CANADA DUTY PAID — DROIT ACQUITTE". For example, a package of cigarettes with the peach coloured federal tear strip is unmarked under the Ontario Act and generally should only be possessed by diplomats and First Nation individuals for their personal use.
Suspension and Cancellation of Authority
The Minister has expanded power to suspend or cancel a person's authorization to be involved in tobacco activities if:
- the person has failed to pay, collect or remit all tax as required,
- the person or any officer, director, shareholder or partner fails to pay a fine levied under the Act, or has been convicted of fraud or tax evasion within the previous five years, or
- the person fails to provide security as demanded by the Minister.
Additional 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 bulletin and various other English and French tax materials 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 0-7794-6458-3
© Queen's Printer for Ontario, 2004
