Vol. 145, No. 4 — February 16, 2011

Registration

SOR/2011-6 February 4, 2011

EXCISE ACT, 2001

ARCHIVED — Regulations Amending the Stamping and Marking of Tobacco Products Regulations (2011)

P.C. 2011-40 February 3, 2011

His Excellency the Governor General in Council, on the recommendation of the Minister of National Revenue, pursuant to paragraphs 304(1)(c) (see footnote a), (f), (f.1) (see footnote b) and (o) and subsection 304(2) of the Excise Act, 2001 (see footnote c), hereby makes the annexed Regulations Amending the Stamping and Marking of Tobacco Products Regulations (2011).

REGULATIONS AMENDING THE STAMPING AND MARKING OF TOBACCO PRODUCTS REGULATIONS (2011)

AMENDMENTS

1. The definition “smokeless tobacco” in section 1 of the Stamping and Marking of Tobacco Products Regulations (see footnote 1) is repealed.

2. Section 3 of the Regulations and the heading before it are replaced by the following:

PRESCRIBED INFORMATION

3. For the purposes of paragraph 34(b) of the Act, the prescribed information is

(a) the tobacco licensee’s name and address;

(b) the tobacco licensee’s licence number; or

(c) if the tobacco product is packaged by the licensee for another person, the person’s name and the address of their principal place of business.

3.1 For the purposes of paragraph 35(1)(a) of the Act, the prescribed information is

(a) the name and address of the manufacturer who packaged the tobacco product;

(b) if the tobacco product was imported by a tobacco licencee, the licensee’s name and address or tobacco licence number; or

3.2 (1) In the case of a package of manufactured tobacco that is to be exported and is intended for delivery to a foreign duty free shop or as foreign ships’ stores, the words “not for sale in Canada” and “vente interdite au Canada” are, in addition to the information set out in sections 3 and 3.1, prescribed information for the purposes of paragraphs 34(b) and 35(1)(a) of the Act.

(2) The words set out in subsection (1) must be printed in a conspicuous manner on the package.

3.3 For the purposes of paragraphs 34(b) and 35(1)(a) of the Act, the following information is prescribed for cases of manufactured tobacco or cigars:

(a) if the case is packed with cartons, the number of cartons in the case and the number of packages in each carton; and

(b) if the case is packed with packages, the number of packages in the case and the weight of the tobacco product in each package.

3.4 For the purposes of subsections 38(1) and (2) of the Act, the prescribed information is

(a) for packages of manufactured tobacco or cigars manufactured in Canada, the information set out in section 3;

(b) for packages of imported manufactured tobacco or cigars, the information set out in section 3.1; and

3.5 For the purposes of the definition “stamped” in section 2 of the Act,

(a) the prescribed information for a carton of black stock cigarettes or black stock tobacco sticks is the information set out in Schedule 4;

(b) the prescribed information for a case of black stock cigarettes or black stock tobacco sticks is the information set out in Schedule 5; and

(c) the prescribed format is the format set out in the applicable Schedule and the prescribed manner is printing the information, in accordance with the specifications set out in that Schedule, on a conspicuous place on two opposing sides of the carton or case.

3. Section 4 of the Regulations and the heading before it are replaced by the following:

PRESCRIBED PERSON

4. (1) For the purposes of subsection 25.1(1) of the Act, a prescribed person is a person who satisfies the requirements set out in paragraphs 2(2)(a) to (e) of the Regulations Respecting Excise Licences and Registrations.

(2) For the purposes of paragraph 25.3(2)(d) of the Act, a prescribed person is a person who transports an excise stamp on behalf of a person described in paragraph 25.3(2)(a) or (b) of the Act.

SECURITY

4.1 (1) Subject to subsections (2) to (4), the amount of security for the purpose of subsection 25.1(3) of the Act is the greater of

(a) the amount equal to one half of the amount of duty that would be imposed under section 42 of the Act on tobacco products if they were stamped with

(i) the unaffixed excise stamps in the applicant’s possession at the time of application, and

(ii) the excise stamps to be issued in respect of the application; and

(b) $5,000.

(2) Subject to subsection (3), if the amount referred to in paragraph (1)(a) is greater than $2 million, the amount of security for the purpose of subsection 25.1(3) of the Act is $2 million.

(3) If a person has provided security under paragraph 23(3)(b) of the Act in an amount that is equal to or greater than the amount of security determined in accordance with subsection (1) or (2), as the case may be, the amount of security for the purpose of subsection 25.1(3) of the Act is nil.

(4) If a person has provided security under paragraph 23(3)(b) of the Act in an amount that is less than the amount of security determined in accordance with subsection (1) or (2), as the case may be, the amount of security for the purpose of subsection 25.1(3) of the Act is the difference between the amount of security determined in accordance with subsection (1) or (2), as the case may be, and the amount of security provided by the person under paragraph 23(3)(b) of the Act.

EXCISE STAMPS

4.2 For the purposes of the definition “stamped” in section 2 of the Act and subsection 25.3(1) of the Act, the prescribed manner of affixing an excise stamp to a package is by affixing the stamp

(a) in a conspicuous place on the package;

(b) in a manner that seals the package;

(d) in a manner that does not interfere with the stamp’s security features; and

(e) in a manner that does not obstruct any information that is required by or under an Act of Parliament to appear on the package.

4. Sections 6 and 7 of the Regulations are replaced by the following:

6 . (1) For the purposes of subsection 38(1) of the Act, the required tobacco markings are

(a) for containers of manufactured tobacco and cigars manufactured in Canada, the marking set out in Schedule 7; and

(b) for containers of manufactured tobacco and cigars manufactured outside Canada, the marking set out in Schedule 8.

(2) Despite paragraph (1)(a), the required tobacco marking for containers of cigars manufactured in Canada and intended for delivery to a duty free shop or as ships’ stores is the marking set out in Schedule 8.

(3) The tobacco markings must be printed on or affixed to the container in a conspicuous manner and in accordance with the specifications set out in the appropriate Schedule.

7. (1) For the purposes of subsection 38(2) of the Act, the required tobacco marking is the marking set out in Schedule 8.

(2) The tobacco marking must be printed on or affixed to the container in a conspicuous manner and in accordance with the specifications set out in Schedule 8.

5. Sections 8 and 9 of the Regulations are repealed.

6. Schedules 1 to 3 to the Regulations are repealed.

7. Schedule 4 of the Regulations is replaced by the Schedule 4 set out in Schedule 1 to these Regulations.

8. Schedule 5 of the Regulations is replaced by the Schedule 5 set out in Schedule 2 to these Regulations.

9. Schedule 6 to the Regulations is repealed.

10. Schedule 7 to the Regulations is replaced by the Schedule 7 set out in Schedule 3 to these Regulations.

11. Schedule 8 of the Regulations is replaced by the Schedule 8 set out in Schedule 4 to these Regulations.

12. Schedules 9 and 10 to the Regulations are repealed.

COMING INTO FORCE

13. (1) Section 3 is deemed to have come into force on September 1, 2010.

(2) Sections 1, 2 and 4 to 12 come into force on the day these Regulations are published in the Canada Gazette, Part II .

SCHEDULE 1
(Section 7)

SCHEDULE 4
(Paragraph 3.5(a))

INFORMATION FOR CARTONS OF BLACK STOCK CIGARETTES AND BLACK STOCK TOBACCO STICKS

DUTY PAID
CANADA
DROIT ACQUITTÉ

The following specifications apply:

Background Colour: Pantone Peach 713

Text Colour: Process Black 100%

Text Font: Helvetica bold, minimum 7 point

Format Width: minimum 2.9 cm

Format Height: minimum 1.4 cm

Format Border: minimum 1.5 point

SCHEDULE 2
(Section 8)

SCHEDULE 5
(Paragraph 3.5(b))

INFORMATION FOR CASES OF BLACK STOCK CIGARETTES AND BLACK STOCK TOBACCO STICKS

DUTY PAID
CANADA
DROIT ACQUITTÉ

The following specifications apply:

Text Colour: Process Black 100%

Text Font: Helvetica bold, minimum 36 point

Format Width: minimum 19 cm

Format Height: minimum 7 cm

Format Border: minimum 1.5 point

SCHEDULE 3
(Section 10)

SCHEDULE 7
(Section 6)

TOBACCO MARKING FOR CONTAINERS OF MANUFACTURED TOBACCO AND CIGARS MANUFACTURED IN CANADA

NOT FOR SALE
VENTE INTERDITE
IN/AU CANADA

The following specifications apply:

Background Colour: Light Blue

Text Colour: Process Black 100%

Text Font: Helvetica, minimum 8 point

Size: 7 cm × 19 cm

SCHEDULE 4
(Section 11)

SCHEDULE 8
(Sections 6 and 7)

TOBACCO MARKING FOR CONTAINERS OF MANUFACTURED TOBACCO AND CIGARS MANUFACTURED OUTSIDE CANADA, CONTAINERS OF CIGARS MANUFACTURED IN CANADA AND INTENDED FOR DELIVERY TO A DUTY FREE SHOP OR AS SHIPS’ STORES, AND CONTAINERS OF IMPORTED MANUFACTURED TOBACCO AND CIGARS REFERRED TO IN SUBSECTION 38(2) OF THE ACT

DUTY NOT PAID
CANADA
DROIT NON ACQUITTÉ

The following specifications apply:

Text Colour: Process Black 100%

Text Font: Helvetica, minimum 36 point

Format Width: minimum 19 cm

Format Height: minimum 7 cm

Format Border: minimum 1.5 point

REGULATORY IMPACT
ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Issue and objectives

The Excise Act, 2001 (the Act) governs federal taxation of tobacco products and imposes excise duty on domestically manufactured and imported tobacco products for consumption in Canada. Under the Act, a tobacco product is “stamped” to indicate that the federal excise duty has been paid. The current tobacco stamping regime consists of non-secure paper stamps and cellophane tear tapes on all tobacco products destined for the duty-paid market. The colour, wording, size and application of a particular stamp are specified in the existing Stamping and Marking of Tobacco Products Regulations (the Regulations).

The current “stamp” (paper stamps and tear tapes) is virtually uncontrolled in terms of accessibility and accountability and has no security features. Counterfeit and other contraband tobacco product producers can easily reproduce the limited stamp specifications outlined in the existing Regulations. The resulting tear tapes and stamps, when applied to counterfeit or other contraband tobacco products, can make these illegal products indistinguishable from legitimate tobacco products making them extremely difficult for enforcement agencies, retailers and consumers to detect. In addition, such tobacco products are sold at prices that do not include the applicable federal excise duty, provincial tobacco tax, the GST/HST, and provincial sales taxes, resulting in substantial revenue losses at both the federal and provincial levels.

Budget 2005 announced measures to improve tobacco taxation and compliance, including enhancements to the existing stamping regime for tobacco products. After years of consultations, legislative amendments to the Act were developed that would implement a new stamping regime including a high-tech excise stamp that would replace the existing stamp requirements in the Regulations. These amendments were part of the Jobs and Economic Growth Act (Bill C-9) that received Royal Assent on July 12, 2010. The new excise stamp’s sophisticated features will make counterfeit and other contraband products more difficult to produce and easier to detect by enforcement officials. The excise stamp will be a controlled product and the amendments to the Act include measures to control the production, distribution and possession of the excise stamp, as well as to provide various related offences, penalties, and other safeguards.

The objectives of this regulatory initiative are to support the legislative amendments to the Act by

(a) Helping to control the distribution and possession of excise stamps;

(b) Ensuring that tobacco licensees and prescribed persons have provided sufficient security in a form satisfactory to the Canada Revenue Agency (CRA), such as cash, certified cheque or transferable bonds issued by the Government of Canada, to protect the CRA from any potential revenue loss on tobacco products as a result of the illegal use of unapplied excise stamps in their inventory; and

(c) Adding three new placement criteria to ensure that the excise stamp is applied in a manner that seals the tobacco package and remains affixed thereto after it is opened, the readability of its security features is not negatively affected, and that the stamp does not obstruct any other information required under any other Act of Parliament.

Description and rationale

Bill C-9 introduced amendments to the Act to implement an enhanced stamping regime with a new excise stamp containing visible features and overt and covert security features that replace the limited stamping requirements in the existing Regulations. These amendments came into force on September 1, 2010, and Bill C-9 allows for a transition period until March 31, 2011, during which tobacco manufacturers may use either the old stamping regime or the enhanced excise stamp. As of April 1, 2011, the industry will be required to use the new excise stamp.

The regulatory amendments support the legislative amendments to the Act as follows:

(a) Subsection 25.1(1) of the Act provides that excise stamps will only be issued to tobacco manufacturers or “prescribed persons.” Subsection 25.3(2) of the Act outlines who may be in possession of unapplied stamps, including a “prescribed person”. The Regulations further define a “prescribed person” for purposes of subsections 25.1(1) and 25.3(2), thereby supporting the overall objective to control the distribution and possession of unapplied excise stamps.

(b) Subsection 25.1(3) of the Act requires that adequate security be provided before excise stamps are issued to tobacco licensees and prescribed persons. The Regulations establish a formula for calculating the amount of security required to protect the CRA from potential excise duty revenue loss on tobacco products as a result of the illegal use of unapplied stamps in the inventory of a tobacco licensee or prescribed person. Whether a sufficient amount of security has been posted with the CRA will be verified and may be recalculated each time a stamp order is placed which serves to limit the number of stamps issued at any particular time.

(c) The Regulations add three new criteria with respect to the placement of the stamp on packages of tobacco products to ensure that the excise stamp is applied in a manner that seals the tobacco package and remains affixed after it is opened; the readability of the stamps security features is not compromised; and the stamp does not obstruct any other information required under any other Act of Parliament (such as the health warning messages required under the Tobacco Products Information Regulations).

In addition, as part of a restructuring of the Stamping and Marking of Tobacco Products Regulations, sections 8 and 9 as well as Schedules 9 and 10 are being repealed and incorporated in a new regulation entitled Regulations Respecting Prescribed Brands of Manufactured Tobacco and Prescribed Cigarettes.

Subsection 38(1) of the Act requires certain tobacco products that are not intended for entry into the duty-paid market to have “tobacco markings” to indicate that the product is not duty-paid. Under subsections 38(3) and (4) of the Act, prescribed brands of manufactured tobacco or cigarettes may be relieved from the tobacco marking requirements where certain conditions are met. Sections 8 and 9, together with Schedules 9 and 10 of the Regulations, identify the brands that are prescribed for purposes of subsections 38(3) and (4). Since sections 8 and 9 and Schedules 9 and 10 serve a different purpose from the other provisions in the Regulations (which elaborate on the format of tobacco stamps, tobacco markings and other prescribed information requirements), these provisions/schedules have been transferred to a new regulation dedicated entirely to brands of tobacco products that are relieved from the stamping and marking requirements.

Regulatory and non-regulatory options considered

Following Budget 2005, the CRA considered various tobacco stamping options. Alternatives considered included enhancements to the security of the tear tape system currently in use; a new prescribed stamp that would replace the tear tape; and a combination of an enhanced tear tape and a prescribed stamp. After consulting with various stakeholders, it was determined that the creation of an enhanced excise stamp to replace the existing stamping requirements was the most preferred option. Unlike a tear tape, an excise stamp can be issued and controlled by the Minister of National Revenue, contains unique identifiers for each product type, and virtually eliminates any potential for counterfeit stamps, thereby permitting consumers, retailers and enforcement partners to identify legitimate tobacco products. Furthermore, a stamp allows for a sophisticated menu of overt and covert security features with the potential for future enhancements such as track and trace technology.

After extensive consultations, Bill C-9 introduced amendments to the Act to implement the enhanced stamping regime and the new excise stamp. Among other things, the amendments to the Act redefine the excise stamp and give the Minister of National Revenue the authority to approve the stamp design and its features; provide that the stamp will only be issued to tobacco licensees and prescribed persons; require that adequate security be provided before excise stamps will be issued; and provide that the excise stamp must be affixed to a tobacco product in a prescribed manner.

The option of allowing the amendments to the Act to come into force without these regulatory amendments was not considered. These regulatory amendments are required to implement the new provisions in the Act pertaining to “prescribed persons,” to establish security amounts and to outline new placement criteria. Without these regulatory amendments, certain administrative aspects of the new tobacco stamping regime could not be administered or enforced. Furthermore, the Regulations must be amended to repeal provisions that pertain to the old stamping regime that are being replaced with the introduction of the enhanced excise stamp. Without the repeal of these provisions, the old stamping regime would continue to exist alongside the new regime.

Benefits and costs

The tobacco taxation framework consists of

(a) The Excise Act, 2001 (including the amendments introduced in Bill C-9).

(b) CRA administrative guidelines and directives. The CRA will be releasing administrative guidelines and directives in support of the enhanced stamping regime. Subjects will include, but will not be limited to, the excise stamp ordering process; the possession, transportation and use of stamps; the accountability framework specific to the stamp; and the process for persons to apply for prescribed status.

There are no additional costs to the CRA as a result of these regulatory amendments.

With respect to the industry, it is anticipated that any costs associated with these regulatory amendments would be minimal. The Regulations further define the term “prescribed person” to whom excise stamps can be issued and who may be in possession of unapplied stamps. Generally, a prescribed person is an importer or someone transporting or affixing excise stamps on behalf of an importer. Canada has approximately 57 importers of tobacco products to Canada, 56 of which are Canadian based. The administrative process to become a prescribed person will require a minimal cost to industry. Total costs for all importers are estimated to be a one-time cost of $11,400.

The Regulations establish the method of calculating the amount of security required for tobacco licensees and prescribed persons before they are issued excise stamps. Under the Act, a person applying for a tobacco licence is already required to provide security in an amount determined by the Regulations Respecting Excise Licences and Registrations. The security provisions in this regulatory initiative are designed to allow tobacco licensees to apply their licensing security in lieu of further security requirements. Therefore, no new associated costs are required for current tobacco licensees. Posting security represents a new requirement for the new category of “prescribed persons”; however, total estimated costs are minimal given that of the 57 importers that currently exist, it is likely that only three will apply to become prescribed persons.

The additional placement criteria should not impose any additional costs to the industry. With the legislative amendments outlined in Bill C-9, the industry will be required to apply the new excise stamp to all tobacco products intended for the duty-paid market as of April 1, 2011. Because of extensive consultations with major tobacco manufacturers and equipment suppliers, tobacco producers have been able to purchase equipment capable of meeting both the legislative stamping requirements imposed by Bill C-9 and the additional placement criteria established by these regulatory amendments.

Based on the foregoing, the additional costs imposed on the industry as a result of these regulatory amendments are expected to be minimal.

The legislative amendments to the Act introduced an enhanced stamping regime with a new “excise stamp” as defined in section 2. The most significant benefits of the excise stamp are that it will give a more reliable indication of the duty-paid status of both domestic and imported tobacco products intended for the duty-paid market; make counterfeit and other contraband products easier to detect; and will provide an effective compliance tool for both the CRA and its enforcement partners.

Since the new excise stamp is a controlled product, every person who has been issued an excise stamp will be required to keep records that will enable the CRA to determine the receipt, retention, location, use or disposition of the stamp. Where stamps are unaccounted for, penalties will apply. The purpose of these provisions is to prevent the excise stamp from being diverted for use in the contraband market.

The benefits of the regulatory amendments are

(a) By further defining the new category of prescribed persons to whom excise stamps can be issued, the Regulations support the overall objective of controlling the distribution and possession of the excise stamp;

(b) By virtue of the new security requirements, the Regulations serve to protect against any potential excise duty revenue loss on tobacco products as a result of the illegal use of any unapplied stamps in a tobacco manufacturer’s or importer’s inventory. It will also serve to limit the amount of excise stamps issued at any particular time; and

(c) With the addition of the new placement criteria, the Regulations support enforcement efforts and ensure the excise stamp does not obstruct other information requirements.

Consultation

Since 2005, there have been various public announcements by the Department of Finance and the CRA with respect to the enhanced tobacco stamping regime. In addition, the CRA has carried out extensive consultations with various stakeholders including tobacco product manufacturers, Health Canada (HC), provincial and territorial governments, enforcement bodies such as the Royal Canadian Mounted Police (RCMP) and the Canada Border Services Agency (CBSA) and other interested parties.

On July 1, 2005, a discussion paper entitled Tobacco Stamping Regime Review and Recommendations was publicly released and all feedback received was reviewed and taken into account during the development of the enhanced stamping regime. The discussion paper described the limitations of the existing tobacco stamping regime and outlined various options for its replacement. Based on representations received during the 60-day consultation period, the current option to create a high-tech excise stamp that would replace the existing unsecured stamp was determined to be the preferred option as a high-tech excise stamp could be controlled by the Minister of National Revenue, could not easily be counterfeited and would increase the likelihood of being able to identify legitimate duty-paid tobacco products.

On January 30, 2008, the CRA hosted an information session to update tobacco manufacturers on the various developments of the stamping regime and outline the proposed major stamping parameters being included in the enhanced regime.

On September 4, 2008, the Minister unveiled a prototype of the new state-of-the-art stamp and made prototypes of the stamp available to manufacturers to facilitate testing of their application equipment. Over 600 000 prototype stamps have since been released to tobacco manufacturers.

On August 6, 2009, the Minister of Finance announced draft stamp-related legislative amendments to the Excise Act, 2001 and the Customs Act. On September 14, 2009, the Minister of National Revenue released proposals to amend the Stamping and Marking of Tobacco Products Regulations to support the proposed legislative amendments. The purpose of the release was to provide interested parties the opportunity to comment on the proposed regime and forward related questions.

Beyond the above events and the issuance of multiple memoranda to keep tobacco manufacturers updated, the CRA has maintained an open door policy and has attended several meetings requested by tobacco manufacturers to discuss various issues. Initially, the tobacco industry expressed concern with respect to the technical challenges that could arise due to the potential overlap of the new excise stamp and the health warning messages on tobacco packages administered by HC. In response, the CRA and HC have worked together and each organization’s regulatory policy objectives in terms of the placement of both the excise stamp and the health warning messages have been satisfied while addressing any industry concerns in complying with both sets of regulatory requirements. In addition, HC and the CRA have agreed that any future amendments by either organization will employ an integrated approach to minimize any disruption for industry participants.

Furthermore, with the legislative amendments outlined in Bill C-9, the industry will be required to apply the new excise stamp to all tobacco products intended for the duty-paid market effective April 1, 2011. Because of extensive consultations, the industry has been able to purchase equipment in advance that is capable of meeting both the new legislative stamping requirements and the additional placement criteria established by these regulatory amendments.

The CRA has also been involved in extensive consultations with domestic tobacco manufacturers and importers with respect to implementation timelines. The industry has been given sufficient time to prepare for the implementation of the enhanced stamping regime, including these regulatory requirements. Bill C-9 provides for a transition period from September 1, 2010 until March 31, 2011, during which the industry has the option of using the existing stamping requirements or the enhanced stamping regime.

The CRA works in partnership with provincial and territorial governments and other federal enforcement agencies, such as the RCMP and the CBSA, to maintain and enhance compliance with Canada’s tobacco tax laws. With the introduction of the enhanced stamping regime, the CRA has been in consultation with its enforcement partners to keep them updated on its status and impact and to explore the possibility of entering into partnership agreements to verify compliance with the stamping requirements outlined under the Act and these Regulations.

The Department of Finance has been consulted and supports these regulatory amendments.

Implementation, enforcement and service standards

The CRA recognizes that tobacco manufacturers and importers require a period of time to order application equipment, make required modifications to automated production lines, reduce inventories of obsolete packaging materials and introduce the excise stamp to their manufacturing environment. To give the industry sufficient time to prepare for the implementation of the enhanced stamping regime, section 54 of Bill C-9 provides for a transition period from September 1, 2010 until March 31, 2011, during which the industry has the option of using the existing stamping requirements or new stamping requirements contained in the legislation and Regulations. After March 31, 2011, the industry will be required to comply with the requirements of the legislation and Regulations for imported and domestically produced tobacco products destined for the duty-paid market. To support the industry’s choice to use the new or old stamping regime during the transition period, it is necessary for the legislation and Regulations to come into effect at the same time. Therefore, as permitted under the authority provided in paragraph 304(2)(d) of the Act, the application date of these regulatory amendments would be retroactive to September 1, 2010, which is the time that the legislative amendments came into effect under section 54 of Bill C-9.

During and after the implementation period, the CRA will continue to assist tobacco manufacturers and importers in their adoption of the enhanced stamping regime and review any potentially challenging packaging formats and implementation issues on a case by case basis.

The CRA is responsible for the administration and enforcement of the stamping provisions of the Act and these Regulations. As such, the CRA is responsible for ensuring that 100% of legal tobacco products bear the stamp and that the integrity of the enhanced stamping regime is rigorously maintained and protected.

There are a number of enforcement provisions provided in the Act that deal with infractions relating to the unlawful packaging or stamping of any raw leaf tobacco or tobacco products, counterfeiting the excise stamp or being involved in related counterfeiting activities. The Act also provides provisions to deal with the unlawful possession of stamps and the supply of the stamp, with accompanying fines and jail terms for persons convicted of such offences.

Persons who contravene the stamping and prescribed information requirements of the Act can face an administrative monetary penalty of 200% of the duty imposed on the tobacco products. In addition, the Act provides for an administrative monetary penalty of up to $25,000 for contravention of the stamping requirements. As well, every person who is issued stamps under the Act (tobacco licensee or a prescribed person) is liable to a penalty if the person cannot account for the stamps as being in their possession, being affixed in a prescribed manner to a tobacco product, or being returned or destroyed as directed by the Minister of National Revenue. The amount of penalty is equal to the amount of duty that would have been imposed on the tobacco products for which the stamp was issued.

As previously indicated, the CRA works in partnership with federal and provincial revenue and enforcement agencies such as the RCMP and the CBSA. The CRA is considering the possibility of engaging in partnership agreements with these enforcement agencies and provincial governments, to verify compliance with the stamping requirements outlined under the Act and the Regulations.

Contact

Mr. Phil McLester
Director
Excise Duties and Taxes Division
320 Queen Street
Place de Ville, Tower A, 20th Floor
Ottawa, Ontario
K1A 0L5
Telephone: 613-954-0111
Fax: 613-954-2226
Email: Phil.McLester@cra-arc.gc.ca

Footnote a
S.C. 2010, c. 12, s. 47(1)

Footnote b
S.C. 2010, c. 12, s. 47(3)

Footnote c
S.C. 2002, c. 22

Footnote 1
SOR/2003-288

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ARCHIVED — Regulations Amending the Stamping and Marking of Tobacco Products Regulations (2011)