Excise Duty Rate Changes for Beer - July 1, 2006

July 2006

On May 2, 2006, the Minister of Finance tabled a Notice of Ways and Means Motion, which included amendments to the Excise Act and the Excise Act, 2001 to implement new rates of excise duty on beer, spirits, wine, and tobacco products, effective July 1, 2006.

For beer produced in Canada, it was announced that new reduced rates of excise duty were to be tiered according to a licensed brewer’s beer production in a calendar year, and would not apply to licensed brewers whose annual beer production is greater than 300,000 hectolitres. Please refer to Excise Duty Notices EDN 9, Excise Duty Rate Changes – July 1, 2006 and EDBN 6, Excise Duty Rate Changes on Beer Produced by Small and Mid-Sized Brewers for further information on the announcements made on May 2, 2006.

On June 28, 2006, the Minister of Finance announced some changes to the tiered rates of duty to Canadian-made beer. These tiered rates will apply to most beer that is brewed in Canada, regardless of the size of the brewer. However, these rates will not apply to reduced alcohol or "de-alcoholized" beer containing not more than 0.5% absolute ethyl alcohol by volume, which will be subject to excise duty at the rate of $2.591 per hectolitre. Please refer to Excise Duty Notices EDBN 9, Reduced Rates of Excise Duty on Beer Brewed in Canada for detailed information on the application of the tiered rates of duty to Canadian-made beer and to EDBN 10, Associated and Related Persons Rules for Brewers for information on the rules applicable to associated corporations and other associated persons who are licensed to make beer under the provisions of the Excise Act.

Following are the revised tables for the tiered rates of duty on beer produced in Canada. There have been several small changes to the rates applicable to beer containing more than 0.5% but not more than 1.2% absolute ethyl alcohol, and a clarification of the volumes subject to the normal duty rates when in excess of 75,000 hectolitres in a company’s annual production. The changes to the tables for the rates of duty on beer that were published with EDN 9 are indicated in bold type. This Notice replaces the portion of EDN 9 that dealt with the rates of excise duty applicable to Canadian-made beer.

Note

The reduced rates of excise duty do not apply to beer or malt liquor packaged before July 1, 2006. For the transitional period only, from July 1, 2006 to December 31, 2006, the reduced rates of duty are limited to the first 37,500 hL of beer and not to 75,000 hL. Therefore, based on the following tables, and only for the transitional period, the increment "From 50,001 to 75,000" does not apply, and the increment "From 15,001 to 50,000" should be read as "From 15,001 to 37,500".

Further information on the excise duty rates may be obtained from the regional excise duty offices. 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.

Beer or Malt Liquor Brewed by Domestic Brewers

More than 2.5% of absolute ethyl alcohol
Annual production volume increments (hectolitres) Rate of excise duty per hectolitre
From 0 to 2,000 $3.122
From 2,001 to 5,000 $6.244
From 5,001 to 15,000 $12.488
From 15,001 to 50,000 $21.854
From 50,001 to 75,000 $26.537
Greater than 75,000 $31.22
More than 1.2% but not more than 2.5% of absolute ethyl alcohol
Annual production volume increments (hectolitres) Rate of excise duty per hectolitre
From 0 to 2,000 $1.561
From 2,001 to 5,000 $3.122
From 5,001 to 15,000 $6.244
From 15,001 to 50,000 $10.927
From 50,001 to 75,000 $13.269
Greater than 75,000 $15.61
More than 0.5% but not more than 1.2% of absolute ethyl alcohol
Annual production volume increments (hectolitres) Rate of excise duty per hectolitre
From 0 to 2,000 $0.2591
From 2,001 to 5,000 $0.5182
From 5,001 to 15,000 $1.0364
From 15,001 to 50,000 $1.8137
From 50,001 to 75,000 $2.2024
Greater than 75,000 $2.591

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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