EDBN31 Elimination of excise duty on non-alcoholic beer

Excise Duty Notice

June 2022

Except as otherwise noted, all statutory references in this publication are to the provisions of the Excise Act. The information in this publication does not replace the law found in the Act and its regulations.

If this information does not completely address your particular situation, you may wish to refer to the Act or relevant regulation, or contact any Canada Revenue Agency (CRA) regional excise office for additional information. These offices are listed at Contact information – Excise and Specialty Tax Directorate.

Any commentary in this publication should not be taken as a statement by the CRA that the proposed amendments will be enacted in their current form.

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On April 7, 2022, the Minister of Finance tabled Budget 2022 and announced proposed amendments to the Excise Act to include a minimum alcoholic strength in the definition of beer or malt liquor. The proposed amendments are included in Bill C-19, Budget Implementation Act, 2022, No. 1, which was tabled in Parliament on April 28, 2022. Beer produced on or after July 1, 2022, that contains not more than 0.5% absolute ethyl alcohol by volume would be excluded from the definition of beer and would not be subject to excise duty.

In this publication, a reference to beer includes malt liquor.

Non-alcoholic beer

Non-alcoholic beer contains not more than 0.5% absolute ethyl alcohol by volume.

Brewer's licence required

Under section 10, a licence is required to manufacture beer for commercial purposes or use any equipment suitable for carrying on the trade of a brewer.

Therefore, a brewer that only manufactures non-alcoholic beer for commercial purposes would continue to require a brewer's licence. For information on licensing, refer to Circular ED200-1, Licensing requirements for manufacturers of beer or malt liquor, wort, yeast, or malt products.

Excise duty implications

Excise duty is imposed and payable on produced beer. In general, beer is produced when it is packaged. A package means any container in which beer is placed for shipment, sale or consumption. For information on produced beer, refer to Circular ED212-4, Guidelines for brewery operations – Beer produced.

Non-alcoholic beer produced before July 1, 2022, is subject to excise duty.

Non-alcoholic beer produced on or after July 1, 2022, would not be subject to excise duty.

Production volume limits on beer brewed by licensed brewers

Reduced rates apply to the first 75,000 hectolitres of beer brewed in Canada (production volume limit) each calendar year by a licensed brewer. For more information, refer to Circular ED212-11, Application of rates of excise duty on the first 75,000 hectolitres of beer brewed in Canada.

The production of non-alcoholic beer does not impact and should not be included in the calculation of a licensed brewer's production volume limit.

Wastage allowance

Under subsection 170(2), the wastage allowance for loss in production is based on the duty assessed on the beer produced. Because non-alcoholic beer would not be subject to excise duty, brewers would not be able to claim wastage allowance on non-alcoholic beer. For more information on wastage allowance, refer to Circular ED212-5, Guidelines for brewery operations – Loss allowance.

Filing returns, reporting periods and maintaining records

Filing returns

All licensed brewers are required to file Form K50B, Excise Duty Return – Brewer, for each reporting period, calculate any excise duty payable on that return, and pay any amount owing. Returns must be filed for each reporting period even if there is no activity or no excise duty payable. The return is due no later than the tenth working day of the month that follows the reporting period, and payment is due no later than the last day of the month that follows the reporting period.

For a list of upcoming filing and payment schedules, refer to Notice EDBN34, K50B filing and payment schedules for brewers (from January 2025 to December 2027).

Reporting periods

Although the reporting period of a licensed brewer is generally a fiscal month, a licensee may apply to the CRA to have a reporting period that is semi-annual instead of monthly. Detailed information on applying and qualifying for a semi-annual reporting period is available in Circular ED212-13, Filing requirements for licensed brewers.

Maintaining records

All licensees are required to maintain adequate books and records to ensure compliance with section 31 of the Act and section 4 of the Brewery Departmental Regulations.

Detailed information on the requirement to maintain adequate books and records is available in Circular ED212-2, Departmental regulations respecting breweries.

Further information