Government of New Brunswick

Disclaimer: This guide is intended to provide information with respect to wholesalers under the Tobacco Tax Act (the Act). This guide should not be regarded as a replacement of the laws, regulations or administrative documents to which it refers.

 

What is Tobacco Tax

The Tobacco Tax is a provincial tax on the purchase or consumption of tobacco products and is administered by the Revenue Administration Division of the Department of Finance.  All tobacco products purchased or consumed in New Brunswick are subject to tobacco tax.

The current tax rates are (Effective February 1, 2017):

  •  25.52 cents on each cigarette,
  •  25.52 cents on each tobacco stick,
  • Seventy-five percent (75%) of the normal retail selling price of each cigar, and
  • 25.52 cents on each gram or any portion of a gram of any tobacco purchased other than cigarettes, cigars and tobacco sticks.

Note:  Tax rates are subject to change. For verification of current tax rates, please contact the Revenue Administration Division at (800) 669-7070 or visit the Department of Finance Website at  www.gnb.ca/finance.

How Tobacco Tax is Collected

The Tobacco Tax Act (the Act) places the responsibility to pay the tax on the consumer.  For simplicity in administration, the tax is collected at the wholesale level. This means that in most cases licensed wholesalers collect an amount equal to the tax on or before delivery of the product to retailers and therefore this tax is included in the price at the point of sale.  This process allows for the transfer of the payment of tax to the consumer.

Who Must Obtain a Tobacco Wholesaler Licence?

Any person (individual, partnership or corporation) who sells tobacco in the Province for the purpose of resale to other licensed wholesalers and licensed retailers must obtain a Tobacco Wholesaler’s Licence.

Licence Application

Applications for Tobacco Wholesaler Licences may be obtained at any Service New Brunswick (SNB) office or by contacting the Revenue Administration Division of the Department of Finance at:

Department of Finance
Revenue Administration Division
P.O. Box 3000
Fredericton, New Brunswick
E3B 5G5

Telephone: (800) 669-7070
Fax: (506) 457-7335

Licence Fee

The fee for a wholesaler’s licence is $2,000 with an annual renewal fee of $1,500. All wholesaler licences expire on   May 31 of each year and must be renewed annually.  

Security

Wholesalers (collectors) may be required to provide security before a wholesaler licence is issued.  This security may be in the form of a bond, cash or other security satisfactory to the Commissioner.

The amount of the security is based on three (3) to six (6) months tax remittances (minimum of $500,000.00) that would normally be collected by the wholesaler (collector) each month.

Licence Rules

  1. The Revenue Administration Division must be notified of any change regarding the address, contact persons or officers of the licencee.
  2. A Tobacco Wholesaler Licence cannot be transferred from one person to another

Refusal to issue a Licence

The Minister may refuse to issue any licence if the Minister has reasonable or probable grounds to believe that the applicant has:

  1. failed to deposit satisfactory security as required;
  2. been convicted of a violation of a provision of the Tobacco Tax Act or any provision relating to tobacco in any other Act;
  3. failed to comply with any term or condition imposed on a previously issued licence; or,
  4. had a previously issued licence revoked during the previous five years..

Suspension of a Licence

The Minister may suspend a licence for a period of time established by regulation if the Minister has reasonable and probable grounds to believe that the licence holder has violated or is failing to comply with the Act or Regulations or with any term or condition of the licence. 

Suspensions will be for one calendar month for the first offense. For each subsequent suspension, the suspension will be double the number of months for which that licence was suspended in the previous suspension.

Revocation of a Licence

The Minister may revoke any licence if the Minister has reasonable and probable grounds to believe that the licence holder has violated or is failing to comply with the Act or Regulations or with any term or condition of the licence. This is an involuntary cancellation of a licence. Once a licence is revoked, the applicant must reapply and meet all licensing conditions in order to be eligible to sell tobacco products again.

Cancellation of a Licence

Cancellation of a licence occurs as a result of a business closure and is voluntary on the part of a licence holder. All requests for cancellation must be in writing. 

The licence holder must also notify the Department of Finance when they sell their business because a licence cannot be issued to the new proprietor until the previous owner’s tobacco licence has been cancelled.

Reinstatement of a Licence

The Minister may reinstate any licence and may impose any combination of conditions and terms established in accordance with the regulations. For example, the Minister may request that an audit be conducted prior to reinstatement.  (A new application must be submitted and the fee paid.)

 

Purchase and Sales Rules

Purchase Rules:

  1. A wholesaler may purchase tobacco from a manufacturer or another wholesaler in any jurisdiction.  However, if the purchase is made in the Province of New Brunswick, the manufacturer or wholesaler from whom the tobacco is purchased must have a valid New Brunswick tobacco wholesaler licence.
  2. A wholesaler may import tobacco from other jurisdictions.  The wholesaler is required to report these imports on a monthly wholesaler’s return  (see Reporting). The imports are further restricted by the province’s tobacco marking requirements.  This means that if any tobacco being imported is required to be marked (see Marking of Tobacco), the tobacco must be purchased from a manufacturer holding a New Brunswick tobacco wholesaler licence and marking authorization, or from a licensed wholesaler who has purchased the product from such a manufacturer.

Sales Rules:

  1. No wholesaler shall sell tobacco to a retailer or wholesaler located in New Brunswick unless the retailer or wholesaler holds a valid New Brunswick tobacco retailer or wholesaler licence.  Tobacco retailer licences are location specific. It is the responsibility of the wholesaler to ensure that the retailer they sell to has a valid tobacco retailer licence for the location to which such tobacco is delivered.

Note: New tobacco wholesalers receive a listing of New Brunswick licensed tobacco retailers and wholesalers. The validity of a wholesaler or retailer licence can also be verified with the Revenue Administration Division at 1-800-669-7070.

  1. Tobacco cannot be delivered to retailers on consignment;
  2. Wholesalers shall not advertise or state directly or indirectly to any consumer that the tobacco tax (or any portion of the tobacco tax) will be assumed, absorbed or refunded by the wholesaler;
  3. Tobacco cannot be advertised for sale on the Internet; and
  4. Tobacco cannot be delivered by mail.
Marking of Tobacco

All packages, cartons, and cases of cigarettes and tobacco sticks and all packages and cases of loose tobacco purchased for sale in New Brunswick are required to have NB specific markings (indicia).

Effective August 1, 2011, New Brunswick Regulation 84-250 under the Tobacco Tax Act was amended to reflect the changes to tobacco marking requirements resulting from the province’s participation in the federal excise stamping regime.

The regulations provide for a 12-month transition period ending July 31, 2012. During this transition period, tobacco products may be marked with either the new excise stamp or the current provincial tear-tape or paper stamps. This 12-month transition period will allow sufficient time for tobacco product inventories bearing tear-tape or paper stamp markings to be depleted and for the production and distribution of products bearing only the new stamp. After the transition period, all packages of cigarettes, tobacco sticks and loose tobacco sold in New Brunswick must bear the new stamp.

Cigarettes, tobacco sticks or loose tobacco that are marked with only the federal marking of “Canada Duty Paid” on peach colored stamps or tobacco marked for other jurisdictions cannot be sold in the Province of New Brunswick.

Note: Permits to mark tobacco products are restricted to manufacturers.

Authorization to Mark

The Commissioner may issue a permit to a wholesaler who is a manufacturer to mark packages, cartons or cases of cigarettes or tobacco sticks, or packages or cases of loose tobacco where the wholesaler:

  1. has submitted an application to the Commissioner;
  2. has paid all tax due under the Act;
  3. has made all returns in accordance with the Act and Regulations;
  4. has a valid wholesaler licence issued under the Act; and
  5. has not had a permit revoked or suspended within five (5) years before the date of the application.

Applications for the authorization to mark permit may be submitted with an application for a wholesaler licence, or separately by a previously registered wholesaler. Part V of the tobacco wholesaler application form must be completed and include the following:

  1. the wholesaler's manufacturer licence number issued by the Canada Revenue Agency (CRA), and
  2. the name of the New Brunswick indicium supplier.

Marking Regulations

  1. Packages of Cigarettes, Tobacco Sticks and Loose Tobacco

    New Provincial Marking Requirements for Packages of Cigarettes, Tobacco Sticks and Loose Tobacco


    Effective August 1, 2012, all packages of cigarettes, tobacco sticks and loose tobacco sold in New Brunswick to a consumer must bear the excise stamp issued by the Minister of National Revenue under the Excise Act, 2001 (Canada), with New Brunswick specific markings. The stamp must be affixed to the packages in accordance with the Excise Act, 2001 (Canada).


    There is no change to the marking requirement for cartons and cases of tobacco.


    The new marking requirements do not apply to cigars, pipe tobacco, smokeless tobacco (snuff and chewing tobacco), blunts, blunt wraps, shisha and other low volume specialty products as these products are not required to be marked in New Brunswick.

  2. Carton of Cigarettes or Tobacco Sticks

    A carton of cigarettes or tobacco sticks that is sold in New Brunswick to a consumer shall be marked with an indicium on each sticker that seals the end flaps on the wrapper, or if the carton is a paperboard box, at each end of the box. The indicium must:


    a. state “NB - N-B”;
    b. be at least 2.9 centimetres in width;
    c. be at least 1.4 centimetres in height;
    d. be surrounded by a border that is 1.5 point in width;
    e. have a background color of Pantone 207, 100%;
    f. have the text and the border colored in process black, 100%; and
    g. have the text printed in Helvetica, bold, 10 uppercase lettering.


  3. Case of Cigarettes, Tobacco Sticks or Loose Tobacco

    A case that contains cartons, packages of cigarettes, tobacco sticks or loose tobacco that are properly marked (see above) must be marked with the initials “NB” on one side of the case and the initials “N-B” on the opposite side which will be;

    a. printed in block letters;
    b. 38.1 millimetres in height, and
    c. colored in process black, 100%.


  4. Tobacco Products not Required to be Marked in New Brunswick

    The following tobacco products are not required to be marked:

    a. cigars,
    b. pipe tobacco,
    c. smokeless tobacco (snuff and chewing tobacco), and
    d. blunts, blunt wraps, shisha and other low volume specialty products.

Responsibility for Tobacco Marking Materials

Any wholesaler authorized to mark tobacco is responsible for ordering all tobacco indicia and stamps and is responsible to ensure that all tobacco products are marked in accordance with the Regulations (see Marking Regulations).

Possession of Unmarked Tobacco

The Tobacco Tax Act provides for the holder of a wholesaler's licence to purchase, possess, store or sell unmarked cigarettes, tobacco sticks or loose tobacco in New Brunswick if:

  1. the sale and delivery of the unmarked tobacco product is to diplomats;
  2. the holder resells the unmarked tobacco product in a jurisdiction outside New Brunswick and is designated in writing by a competent authority in that jurisdiction to collect the tobacco tax levied in that jurisdiction;
  3. the holder resells the unmarked tobacco product to another holder of a wholesaler licence;
  4. the holder is also a manufacturer who has a valid permit issued under the Tobacco Tax Regulation to mark, possess or store packages, cartons or cases of tobacco product in New Brunswick in accordance with Regulations (see Marking Regulations); or
  5. the holder sells unmarked tobacco from a ship chandler operation to consumers situated outside the territorial waters of Canada.
Record Keeping

Every wholesale (collector) who sells tobacco shall keep and maintain records showing:

  1. the details, by quantity in grams or units and by type, package size or brand name, of

    i. all tobacco marked by the collector;
    ii. all sales of tobacco to and from other wholesalers in the Province, including the names of the other wholesalers and the dates of the transactions;
    iii. all tobacco imported from outside the Province or exported out of the Province by the collector; and
    iv. all sales of tax exempt or taxable tobacco to retailers or consumers within the Province, and
  2. the names and addresses of all persons from whom the collector purchased tobacco products or to whom tobacco products were sold in transactions referred to in subparagraphs a)(ii) to (iv), and the dates of the transactions.

 

Maintenance of Records

Records must be maintained in easily readable paper or electronic format for six years or until such time that authorization is received in writing from the Provincial Tax Commissioner.

Availability of Records

Records shall be made available for inspection and audit by an inspector, an auditor or any person designated by the Commissioner upon request at any reasonable time.

Reporting

Wholesalers (collectors) are required to complete monthly tax returns, including schedules relative to sales and purchases of tobacco.

Due Date:

The returns and payments must be filed with the Province by the twenty-fifth day of the month following the month being reported.  If the twenty-fifth day falls on a Saturday, the due date is the previous working day.  If the twenty-fifth day falls on a holiday or on a Sunday, the due date is the next working day.

Reporting Method

Tobacco wholesalers must select only one of the following methods of tax payment:

Purchase Method

  1. Tobacco products are purchased exempt of New Brunswick tobacco tax.  Tax is remitted monthly on all purchases made during the month. To assist the wholesaler in the calculation of tax due, tax memo amounts are included on the purchase invoice. However, it is the responsibility of the collector to assure that this is correct.  The manufacturers/wholesalers are not responsible for errors in calculations in reporting the tax memo amount on invoices., or
  2. Tobacco tax is paid to the supplier at time of purchase.  No tax is remitted with the monthly report..

 

Wholesalers on the purchase method must complete the TTA_11 tax return.  For details on tax calculation, see guide TTG_407 - Instructions for the Completion of Tobacco Wholesaler / Collector TTA_11 Tax Return

Sales Method

Tobacco products are purchased exempt of New Brunswick tobacco tax. Tax is remitted monthly on all sales made during the month.

Wholesalers on the sales method must complete the TTA_12 tax return. For details on tax calculation, see guide TTG_408 - Instructions for the Completion of Tobacco Wholesaler / Collector TTA_12 Return.

Note: Changes from one reporting method to another must be pre-approved by the Revenue Administration Division. Approval to change the method of tax payment may require an audit of the wholesaler’s records.

Returns and Instructional Guide

Copies of Tobacco Wholesaler/Collector Tax Returns (TTA_11 or TTA_12) and Instructions for the Completion of Tobacco Wholesaler/Collector Returns (TTG_407 or TTG_408) are available at:

Department of Finance
Revenue Administration Division
 P.O. Box 3000
Fredericton, New Brunswick
E3B 5G5

Telephone: (800) 669-7070
Fax: (506) 457-7335

Refunds and Rebates

Theft / Fire / Damage

To claim a refund of tobacco tax in these situations, an application for refund of tobacco tax may be made by completing form  TTA_06. The following information must be included with your claim:

  1. copies of invoices pertaining to the purchase of tobacco products prior to the theft or destruction;;
  2. documentary evidence in the form of a "proof of loss" form from your Insurance Company stating the date of the theft or loss, the amount of tobacco stolen or destroyed, etc.;
  3. a copy of the police report or file number (with a contact name and number) from the Investigating Police Department; and
  4. an itemized list of tobacco products stolen, damaged or destroyed.

Refund claims shall be made within six (6) months after the day on which the substantiated loss occurred.

Overpayment of Tax by Collectors

Licensed wholesalers as collectors receive tax from the taxpayer or collect an amount equal to the tax at the wholesale level.  There are instances when errors are made in the calculation of the tax to be remitted.  This could result from clerical errors, using the wrong tax rate, applying tax to an exempt item etc.

To claim a refund of an overpayment of tobacco tax, an application for refund may be made by completing form  TTA_06. The following information must be included with your claim:

  1. opies of invoices showing the tax that was paid; and
  2. supporting information confirming the actual amount that should have been remitted.

Refund claims must be made within three (3) years from the day on which the overpayment was made.

Bad Debts

Tobacco tax is collected and remitted at the wholesale level to simplify the tax collection process.  Since the sale to the retailer and subsequently to the consumer is on a tax-included price basis, the Tobacco Tax Act allows for a rebate of the tax when the wholesaler (collector) is unable to collect the tax from a retailer because the retailer is bankrupt or has discontinued the business of selling tobacco.

In such instances, wholesalers may request a refund of the tobacco tax that they have already remitted by submitting an application for Refund of Tobacco Tax (form TTA_06). The following information must be included with the application:

  1. copies of invoices showing the credit  extended to the retailer with respect to the purchase of tobacco, including the tobacco tax that was imposed; 
  2. supporting documentation confirming the collector remitted the tobacco tax on behalf of the retailer; and
  3. supporting documentation confirming the retailer has defaulted in repaying the collector the amount of tobacco tax payable and that and the retailer is bankrupt or has discontinued the business of selling tobacco.

Refund claims must be made within (6) six months after the day on which the tobacco tax was remitted.

If a wholesaler receives payment from a retailer after receiving a refund, the wholesaler must remit the tax or account to the Minister for the tax on the next monthly tobacco tax return to be filed with the Minister.

 

Audit and Inspection

Under subsections 28 and 29 of the Revenue Administration Act, any appointed officer, auditor, inspector or any other person with the written authority of the Commissioner may enter upon the premises of any person in which any business involving the sale of tobacco is carried on in order to:

  1. ascertain the amount of tax payable, or the money remissible by any person;
  2. audit or examine any books of account, records, documents, recordkeeping devices or papers and any account, invoice, voucher, letter, telegram or other document that is related or may relate to the amount of tax that may be payable or is to be collected under the  Tobacco Tax Act;
  3. examine any goods or property that may assist him/her in determining the accuracy of any information that is or should be in such books and records;
  4. require the owner or manager of the property or business and any other person on the premises or place to give him/her all reasonable assistance with the audit or examination and to answer all proper questions relating to such audit or examination; and
  5. seize any books of account, records, documents or other papers which are discovered during an audit or examination, which the inspector or the auditor believes on reasonable grounds may provide evidence of an offence under a revenue Act.

The owner, occupier or person in possession or in charge of the premises so entered shall answer all questions relating to any of the matters stated above, and shall produce for inspection such books, records, documents and tobacco products as required.  

Administrative Penalties

The following schedule provides information on the administrative penalties that are applicable to wholesalers for violations under the Tobacco Tax Act:

 

Violation

 

Administrative Penalty

 

Wholesaling without a valid license

 

1st Offence $240
2nd offence $480
3rd & subsequent $5,200

 

Wholesaling to a vendor that does not possess a valid license

 

1st Offence $240
2nd Offence $480
3rd & Subsequent $5,200
Failure to keep a record of tobacco sales.

 

1st Offence $140
2nd Offence $280
3rd & Subsequent $1,100
Failure to make returns when required.

 

1st Offence $140
2nd Offence $280
3rd & Subsequent $1,100

Please note that continued failure to comply with the provisions of the Tobacco Tax Act and regulations is cause for a wholesaler’s licence to be revoked.

The Department will not renew a licence where a wholesaler has any of the following:

  1. Delinquent return(s);
  2. an outstanding balance on an account, where acceptable payment arrangements have not been made, or are not being honoured; or
  3. an unpaid administrative penalty.

In addition, the Department may revoke or suspend licences where the conditions of the licence have not been met.  Re-instatement of a licence following a revocation will include additional fees, terms and conditions.

Objection and Appeal

Notice of Objection

Wholesalers wishing to dispute the liability for the amount assessed against them, may file a Notice of Objection with the Commissioner setting out the reasons for the objection and all relevant facts.

The notice must be filed within 30 days after paying the tax or the date of the service or mailing of a Notice of Assessment, whichever is sooner.

Upon receipt of a Notice of Objection, the Commissioner shall within 60 days reconsider the assessment and vacate, confirm or vary the assessment or reassess, and the Commissioner shall thereupon notify the wholesaler of the action by personal service or by ordinary or registered mail.

Notice of Appeal

Wholesalers who are dissatisfied with the decision of the Commissioner may, within 30 days after being notified of such decision, file a Notice of Appeal with the Minister of Finance. The Minister shall within 30 days after the receipt of a Notice of Appeal, fix a date to consider the appeal and shall give a notice of such hearing to the appellant and the Commissioner. Upon any such appeal, the Minister may affirm, vary or reverse the decision of the Commissioner and shall give a written notice of the decision to the appellant by personal service or by ordinary or registered mail.

Appeal to The Court of Queen’s Bench

Appellants who are dissatisfied with the decision of the Minister may, within 30 days after the date of service or mailing of the notice explaining the Minister’s decision, appeal from such decision to a judge of The Court of Queen’s Bench of New Brunswick

Definitions

 

Carton

 

A paperboard box or wrapper containing less than sixteen (16) packages of cigarettes or less than two hundred (200) tobacco sticks.

 

Case

 

a) with reference to cigarettes or tobacco sticks, a package containing at least twenty-five (25) cartons, and

 

b) with reference to loose tobacco, a package containing at least ten packages of loose tobacco.

 

Commissioner

 

The Provincial Tax Commissioner provided for under the Revenue Administration Act and includes those persons designated by the Minister of Finance to act on behalf of the Provincial Tax Commissioner.

 

Consignment

 

Delivery to a merchant for sale but remaining the property of the sendor until sold.

 

Consumer

 

A person who, within the Province, purchases tobacco from a vendor at a retail sale in the Province for his own consumption or for the consumption of other persons at his expense.

 

Loose Tobacco

 

Fine-cut manufactured tobacco for use in making cigarettes.

 

Manufacturer

 

A person who manufactures, fabricates or produces tobacco for distribution, sale or storage in New Brunswick.

 

Marked Tobacco

 

A package, carton or case of cigarettes or tobacco sticks or a package or case of loose tobacco that is marked for sale in New Brunswick in accordance with the Regulations under the  Tobacco Tax Act (see Marking of Tobacco). Tobacco marked for other jurisdictions is considered unmarked tobacco for purposes of this guide.

 

Package

 

Package, box, tin or other container in which tobacco is contained or sold.

 

Retailer

 

Any person who, within the Province, sells tobacco to a consumer.

 

Tobacco

 

Tobacco in any form in which tobacco is consumed, and includes snuff.

 

Tobacco Stick

 

Any roll or tubular construction of tobacco intended for smoking, other than a cigar, that requires further preparation to be consumed.

 

Unmarked Tobacco

 

A package, carton or case of cigarettes or tobacco sticks or a package or case of loose tobacco that is not marked for sale in New Brunswick.

 

Wholesaler

 

Any person who, within the Province, sells tobacco for the purpose of resale.

 

 

Inquiries

All inquiries should be directed to:

 

Department of Finance
Revenue Administration Division
P.O. Box 3000
Fredericton, New Brunswick
E3B 5G5

 

Telephone: (800) 669-7070
Fax: (506) 457-7335
E-mail: wwwfin@gnb.ca
Web Site: www.gnb.ca/finance

 

Legislation:

New Brunswick Acts and Regulations may be accessed online or copies can be purchased from the Queen’s Printer.