If you’re a business owner in Canada, it’s important to understand the different types of taxes you’ll be responsible for. One such tax is the excise tax. In this blog post, we’ll cover everything you need to know about excise tax, including what it is, who needs to pay it, and how to calculate it.

What is Excise Tax?

Excise tax is a tax that is charged on specific goods and services in Canada. These goods and services include alcohol, tobacco, fuel-inefficient vehicles, and cannabis products. Excise tax is usually included in the price of these products, so customers don’t usually see a separate line item for it on their receipts.

Who Needs To Pay Excise Tax?

If you’re a manufacturer, importer, or distributor of goods subject to excise tax, you’ll need to pay it. The excise tax is usually payable when the goods are produced in Canada or imported into Canada.

How Is Excise Tax Calculated?

The amount of excise tax you’ll need to pay depends on the type of product and the amount of it you’re producing or importing. Excise tax rates are usually set by the federal government and can vary depending on the product. For example, the excise tax on cigarettes is currently $0.32726 per cigarette, while the excise tax on beer is $0.32 per litre of beer.

To calculate your excise tax liability, you’ll need to determine the amount of excisable goods you’ve produced or imported and then multiply that by the applicable excise tax rate. For example, if you imported 10,000 cigarettes into Canada, you would multiply that by the excise tax rate of $0.32726 to get your total excise tax liability.

Excise Tax in Ontario

In Ontario, the excise tax is collected by the Canada Revenue Agency (CRA) and is subject to the same rules and regulations as in the rest of Canada. The province also has its own specific taxes on some of these goods, such as a tobacco tax and a fuel tax.

In conclusion, excise tax is an important tax that businesses need to be aware of if they’re involved in the production, import, or distribution of excisable goods. It’s important to understand the specific rates and regulations for the products you’re dealing with to ensure you’re paying the correct amount of tax. If you’re unsure about how to calculate or pay excise tax, consult with a tax professional or contact the CRA for assistance.