Chapter 4: Excise taxes, excise duties and softwood lumber products export charge

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• What are excise taxes and excise duties?
• Excise taxes
• Excise duties
• Softwood lumber products export charge

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What are excise taxes and excise duties?

There are two types of federal levies on products manufactured or produced in Canada: excise taxes and excise duties.

These levies are applied to a limited range of goods at different rates and in different ways, depending on the product. Excise tax and excise duty apply to the goods before GST/HST is added on.

Excise taxes

Excise taxes are charged on:

• fuel‑inefficient vehicles;
• automobile air conditioners; and
• certain petroleum products.

Notes
The excise tax on jewellery was eliminated effective May 2, 2006.

The heavy vehicle weight tax was replaced by the fuel inefficient vehicle tax effective March 19, 2007.

The Excise Tax Act sets out the rates of tax for each of these goods.

When goods are manufactured in Canada, excise tax is payable at the time the goods are delivered to the purchaser. When they are imported, excise tax is payable by the importer, at the time the goods are imported.

Under certain circumstances, you may be able to claim a refund of the excise taxes you paid.

Manufacturers need an excise tax licence ("E" licence) unless they qualify as a small manufacturer. You qualify as a small manufacturer if your total annual sales are not more than $50,000.

A wholesaler licence ("W" licence) allows you to buy goods for resale without paying excise taxes. You may qualify for a W licence under certain limited circumstances, thereby enabling you to buy goods exempt of excise tax and to collect and remit the excise tax at the time you sell the goods.

For more information, go to Excise taxes and special levies or call 1-866-330-3304.

Excise duties

Excise duties are charged on spirits, wine, beer, and tobacco products. The rates of duty on spirits, wine, and tobacco products are set out in the Excise Act, 2001 and duty rates on beer are contained in the Excise Act.

When these goods are manufactured in Canada, duty is payable on goods at the point of packaging rather than at the point of sale. Generally, when they are imported into Canada, duty is payable by the importer at the time the goods are imported.

All persons who manufacture these goods in Canada must be licensed. Most licensees must provide security of at least $5,000.

For more information, go to Excise duty or contact the nearest Regional Excise Duty Office. For a listing of their numbers, see Excise Duty Memoranda EDM1-1-2, Regional Excise Duty Offices.

Softwood lumber products export charge

The Softwood Lumber Products Export Charge Act, 2006 is the implementing legislation for an export charge introduced under the Softwood Lumber Agreement, 2006 (SLA 2006) between the governments of Canada and the United States (U.S.). The Act imposes a charge on certain softwood lumber products exported to the U.S. after October 11, 2006. Products subject to the export charge are defined by the SLA 2006, and are included on the Export Control List under Export and Import Permits Act, administered by the Department of Foreign Affairs and International Trade.

Every person who exports softwood products subject to the charge to the U.S. is required to register with the CRA on or before the day on which the products are exported. To register, exporters must complete a  B253, Softwood Lumber Products Export Charge - Registration Form. This form is available at Forms and publications and must be sent to the following address:

Surrey Tax Centre
Softwood Lumber Division
9755 King George Boulevard
Surrey BC V3T 5E1

Every person who is registered must file, on a monthly basis, Form B275, Softwood Lumber Products Export Charge Return, in which they calculate the charge(s) imposed during the calendar month. The return and the export charge payment are due on or before the last day of the month following the month during which a charge was imposed. For example, a return and a payment for the month of January will be due on or before the last day of February.

For more information, go to Softwood lumber products export charge. For information on registration or returns and payments, call 1-800-935-0313.

For technical enquiries regarding the Softwood Lumber Products Export Charge Act, 2006, call 1-866-330-3304.

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