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General Information – Vaping Products

From: Canada Revenue Agency

Excise Duty Notice EDN78

July 2024

This version replaces the one dated July 2022. This notice has been updated to add information regarding amendments to the Excise Act, 2001, that were included in Bill C-59, Fall Economic Statement Implementation Act, 2023, which received royal assent on June 20, 2024, the Excise Duties on Vaping Products Regulations, which were published in the Canada Gazette, Part II on May 8, 2024, and the excise duty rate increase effective July 1, 2024, included in Bill C-69, Budget Implementation Act, 2024, No.1, which received royal assent on June 20, 2024.

The purpose of this notice is to provide general information to persons undertaking any regulated activity involving vaping products under the Excise Act, 2001.

Except as otherwise noted, all statutory references in this publication are to the provisions of the Excise Act, 2001. 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 refer to the Act or relevant regulation, or contact your CRA regional excise office for additional information. The offices are listed at Contact Information – Excise and Specialty Tax Directorate. 

Table of Contents

Overview

The Canada Revenue Agency (CRA) is responsible for administering and enforcing the excise duty framework for vaping products included in the Excise Act, 2001, including the coordinated vaping duty system with specified provinces. The framework includes the imposition of excise duties that generally apply to vaping products manufactured in Canada or imported into Canada and intended for the duty-paid market. The vaping duty and additional vaping duty, as applicable, apply to vaping products whether or not they contain nicotine.

Definitions

The following terms, defined under the Act or related regulations, are used in this notice:

Additional vaping duty means a duty imposed under section 158.58 in respect of a specified vaping province. This is in addition to vaping duty imposed under section 158.57.

Accredited representative means a person who is entitled under the Foreign Missions and International Organizations Act to the tax exemptions specified in Article 34 of the Convention set out in Schedule I to that Act or in Article 49 of the Convention set out in Schedule II to that Act.

Coordinated vaping duty system means the system providing for the payment, collection and remittance of additional vaping duty imposed under any of section 158.58 and any related sections.

Manufacture includes, in respect of a vaping product, any step in the production of the vaping product, including inserting a vaping substance into a vaping device or packaging the vaping product. It does not include stamping a vaping product.

Packaged means that the vaping product is packaged in the smallest package, including any outer wrapper, package, box or other container, in which it is sold to the consumer.

Person means an individual, a corporation, a partnership, a trust, the estate of a deceased individual, a government or a body that is a society, a union, a club, an association, a commission or another organization of any kind.

Stamped, in respect of a vaping product, means that a vaping excise stamp has been affixed to the vaping product or its container in the prescribed manner to indicate that vaping duty and any additional vaping duty has been paid.

Specified vaping province means a prescribed province under the Excise Duties and Vaping Products Regulations. The following are prescribed provinces:

Take for use, in respect of a vaping product, means to consume, analyze or destroy the vaping product.

Vaping device means property that is one of the following:

Vaping duty means a duty imposed under section 158.57.

Vaping excise stamp means a stamp that is issued by the CRA under subsection 158.36(1) and that has not been cancelled under section 158.4.

Vaping product means one of the following:

It does not include a cannabis product or a tobacco product.

Vaping product drug means a vaping product that is a drug that has been assigned a drug identification number under the Food and Drug Regulations.

Vaping product licensee means a person that holds a vaping product licence issued under section 14, authorizing the person to manufacture vaping products in Canada or import packaged vaping products for stamping in Canada by the person.

Vaping product marking means prescribed information that is required under the Act to be printed on, or affixed to, a container of vaping products that are not required under this Act to be stamped.

Vaping substance means a substance or mixture of substances, whether or not it contains nicotine, that is produced to be used, or sold for use, with a vaping device to produce emissions in the form of an aerosol.

Licensing requirements

Vaping product licence

Every person is required to obtain a vaping product licence under the Act to manufacture vaping products or import packaged vaping products for stamping in Canada, with the exception of persons manufacturing vaping products for personal use. The vaping product licence is issued by the CRA.

The following general information pertains to the requirements of a vaping product licensee under the Act. A licensee must:

Note that the licence is valid for a period of up to three years and is not renewed automatically.

For detailed information on vaping product licensing requirements, refer to Excise Duty Notice EDN79, Obtaining and Renewing a Vaping Product Licence.

Excise warehouse licence

An excise warehouse licence may be required for unstamped vaping products to be exported or sold to an accredited representative. Under section 158.49, vaping products that are intended for export or sale to an accredited representative must be entered into the licensee’s excise warehouse before the end of the second calendar month following the month of manufacture or import.

For detailed information on obtaining an excise warehouse licence, refer to Excise Duty Notice EDN79.

For detailed information on marking requirements for vaping products entering an excise warehouse, refer to Excise Duty Notice EDN83, Vaping Product Marking Requirements.

Requirement to apply as a vaping prescribed person

To obtain vaping excise stamps, an importer is required to become a vaping prescribed person if they do not manufacture or stamp vaping products in Canada. Under subsection 158.36(1), the CRA may issue vaping excise stamps to a prescribed person that is importing vaping products destined for the Canadian duty-paid market. 

Under the Act, in order to be issued vaping excise stamps, a vaping prescribed person must:

For detailed information on becoming a vaping prescribed person, refer to Excise Duty Notice EDN81, Becoming a Vaping Prescribed Person.

Imposition and payment of duty on vaping products

Vaping duty

Vaping duty is imposed under section 158.57 on vaping products manufactured in Canada or imported in the amount determined under Schedule 8.

Vaping duty is payable by the vaping product licensee that packaged or imported the vaping products at the time the vaping products are stamped. Stamping must be completed by the vaping product licensee before the end of the second calendar month following the month in which the products were packaged or imported into Canada. In the case of imported vaping products stamped outside of Canada, vaping duty is payable at the time of importation by the importer.

Rates of vaping duty

Effective July 1, 2024, the rates of vaping duty imposed on vaping liquids under section 158.57 are:

Effective July 1, 2024, the rates of vaping duty imposed on vaping solids under section 158.57 are:

For detailed information on the changes to the excise duty rates on vaping products, refer to Excise Duty Notice EDN96, Budget 2024 – Changes to Excise Duty Rates on Vaping Products Effective July 1, 2024.

Additional vaping duty

Under section 158.58, an additional vaping duty is imposed on vaping products manufactured in Canada or imported, if the products are for consumption, use or sale to consumers in a specified vaping province. The amount of additional vaping duty is determined under Schedule 8 of the Act.

This additional vaping duty is in addition to the vaping duty imposed under section 158.57.

Additional vaping duty is payable by the vaping product licensee that packaged or imported the vaping product at the time the vaping product is stamped. In the case of an imported vaping product stamped outside of Canada, additional vaping duty is payable at the time of importation by the importer.

For detailed information on the coordinated vaping duty system, refer to Excise Duty Notice EDN95, Coordinated Vaping Duty System.

Rates of additional vaping duty

Effective July 1, 2024, the rates of additional vaping duty imposed on vaping liquids under section 158.58 are:

Effective July 1, 2024, the rates of additional vaping duty imposed on vaping solids under section 158.58 are:

Vaping duty and additional vaping duty on vaping products taken for use

Under section 158.6 and subsection 158.6(2), vaping duty and any additional vaping duty are imposed on vaping products that are consumed, analyzed or destroyed (taken for use). The vaping duty, and any additional vaping duty, are payable by the vaping product licensee responsible for the vaping product at the time the vaping product is taken for use. This includes unpackaged vaping products taken for use for research and development or sampling purposes. 

Vaping duty and additional vaping duty on unaccounted vaping products

Under section 158.61 and subsection 158.61(2), vaping duty and any additional vaping duty, are imposed on vaping products, on which vaping duty and any additional vaping duty have not been paid if the vaping products cannot be accounted for as being in the possession of a vaping product licensee or in the possession of another person, as permitted under the Act. The vaping duty and any additional vaping duty are payable by the vaping product licensee responsible for the vaping products at the time the vaping products cannot be accounted for. 

Relief of vaping duty and additional vaping duty

There are limited circumstances where the vaping duty and any additional vaping duty is either refunded, relieved or not payable with respect to vaping products.

Re-working or destroying vaping products

Under section 158.53, a vaping product licensee may re-work or destroy a vaping product in a manner authorized by the CRA. Under section 187.2, a vaping product licensee may be eligible for a refund of the vaping duty and any additional vaping duty paid on the vaping product if the licensee applies for the refund within two years of the authorized re-work or destruction. Only the vaping product licensee that has paid the duty and destroyed or re-worked the vaping product may apply for a refund using Form B602, Application for a Refund of Vaping Duty.

Vaping products imported by a licensee

Section 158.62 relieves the vaping duty and any additional vaping duty on imported vaping products that are not stamped and are imported by a vaping product licensee for further manufacturing or stamping.

Section 158.64 also relieves the vaping duty and any additional vaping duty imposed at the time of importation on vaping products imported by a vaping product licensee for re-work or destruction in a manner approved by the CRA if the vaping products were originally manufactured and stamped in Canada by the licensee.

Vaping duty and additional vaping duty not payable

Section 158.66 provides for certain circumstances where the vaping duty and any additional vaping duty on vaping products is not payable, including:

Stamping requirements

Under section 158.46, a vaping product licensee must stamp packaged vaping products to enter the duty-paid market. The vaping excise stamp indicates that vaping duty and any additional vaping duty has been paid on the packaged vaping products entered into the duty-paid market. To purchase vaping excise stamps, a vaping product licensee is required to register for the vaping stamping regime.

Under section 158.47, an imported vaping product must be packaged and stamped before it is released under the Customs Act for entry into the duty-paid market. The only exceptions are for a vaping product that is either:

Under section 158.511, if a vaping product licensee imports a packaged vaping product for stamping by the vaping product licensee, they must immediately deliver the vaping product to its premises for stamping after it is released under the Customs Act.

An importer must be approved by the CRA to purchase vaping excise stamps. If an importer also manufactures vaping products in Canada or imports packaged vaping products for stamping, they will be able to purchase vaping excise stamps under their vaping product licence. If an importer is not manufacturing vaping products in Canada or importing packaged vaping products for stamping in Canada, they must apply to become a vaping prescribed person.

For detailed information on the vaping stamping regime, refer to Excise Duty Notice EDN80, Overview of Vaping Excise Stamps.

Unstamped vaping products

Section 158.44 prohibits any person, other than a vaping product licensee, from disposing of, selling, offering to sell, purchasing or possessing unpackaged and unstamped vaping products.

Subsection 158.44(3) allows the following persons, in addition to vaping product licensees, to possess unpackaged and unstamped vaping products:

Subsection 158.44(4) provides the following exceptions that allow a person to dispose of, sell, offer for sale or purchase an unstamped vaping product:

Sale or distribution by a licensee

Under subsection 158.45(1), a vaping product licensee is prohibited from distributing, selling or offering for sale a vaping product unless the product is packaged and stamped.

Exceptions

Under subsection 158.45(2), a vaping product licensee is permitted to distribute, sell or offer for sale an unstamped vaping product under the following exceptions:

Notice – absence of stamp

Section 158.48 provides that the absence of a vaping excise stamp on a vaping product indicates that vaping duty and any additional vaping duty have not been paid on that product.

Unlawful removal

Subsection 158.42(1) provides that a vaping product cannot be removed from the premises of a vaping product licensee unless it is packaged and, if the product is intended for the duty-paid market, stamped to indicate that vaping duty and any additional vaping duty have been paid. If the vaping product is intended for export or sale to an accredited representative, vaping product markings are required in accordance with the Act.

Exceptions

Subsection 158.42(2) provides for exceptions that permit a vaping product licensee to remove an unpackaged vaping product from their licensed premises where:

Maintaining records and filing returns

Keeping records

Every vaping product licensee and vaping prescribed person is required, under subsection 206(1), to maintain all records that are necessary to determine whether they are in compliance with the Act.

Records to be maintained

Subsection 206(2.02) states that every vaping product licensee is required to retain records that will enable the determination of the amount of vaping product manufactured, received, used, packaged, re-worked, sold and disposed of by the licensee. Books and records are required to be maintained in an appropriate form and contain sufficient information to allow for the verification of a person’s compliance with the Act, including the person’s liabilities and obligations with respect to vaping duty and any additional vaping duty or the amount of any refund the person has claimed.

With respect to exports, all documents used as evidence of export are required to be sufficient to enable the entire shipment of vaping products to be traced from its origin in Canada to its destination outside of Canada.

Subsection 206(2.2) requires that every person that has been issued vaping excise stamps, including vaping product licensees and vaping prescribed persons, retain all records that are necessary to determine the receipt, retention, location, use or disposition of the vaping excise stamps.

For additional information on the requirement to maintain books and records, refer to Excise Duty Memorandum EDM9-1-1, General Requirements for Books and Records.

Filing returns

Section 160 requires every vaping product licensee to file Form B600, Vaping Duty and Information Return, for each calendar month and to calculate and remit any vaping duty and additional vaping duty payable on that return. The return must be filed and vaping duty and additional vaping duty must be remitted no later than the last day of the first month following the reporting period.

A licensee that possesses more than one licence under the Act is required to file separate returns for each licence. For example, a vaping product licensee that also possesses an excise warehouse licence is also required to file Form B262, Excise Duty Return – Excise Warehouse Licensee.

Section 4.01 of the Stamping and Marking of Tobacco, Cannabis and Vaping Products Regulations requires that a vaping prescribed person file Form B601, Vaping Information Return – Prescribed Person, for each calendar month, with respect to the possession and use of any vaping excise stamps issued to them.

For more information about the amounts to include on Form B600 and Form B601, go to Excise duty on vaping products.

Branches or divisions filing separate returns

As set out in subsection 164(1), where a vaping product licensee has separate branches or divisions with distinct operations under a vaping product licence, the licensee may apply to the CRA for authority to file separate returns for each branch or division.

Debts and the collections process

Vaping duty and any additional vaping duty, as well as other amounts payable under the Act, are debts recoverable in Federal Court or any other court of competent jurisdiction or in any other manner provided under the Act, according to subsection 284(1.1).

A vaping product licensee that owes duties may receive a notice or a telephone call from a CRA official as a reminder of their obligation to pay an outstanding amount or debt.

A vaping product licensee or vaping prescribed person that is late in filing returns may receive a notice or a telephone call from a CRA official as a reminder of their obligation to file outstanding returns.

Subsection 189(4) states that if a licensee has to file any returns and other records that are required to be filed under the Air Travellers Security Charge Act, the Customs Act, the Excise Act, the Excise Act, 2001, the Excise Tax Act, the Income Tax Act and the Select Luxury Items Tax Act but has not done so, any refund to which they are entitled will be withheld until all required returns are filed.

According to section 290, if a vaping product licensee or vaping prescribed person has any outstanding amounts owing under the Act, the CRA may deduct or set off any amount owing to that person by the Government of Canada (for example, a GST/HST rebate) against those outstanding amounts.

Offences and penalties

Under section 214, any person that manufactures vaping products without a licence is in contravention of the Act and is guilty of an offence. Upon conviction, that person may be liable to a fine or to imprisonment, or to both. The only exception is provided in subsection 158.35(3), which allows an individual who is not a vaping product licensee to manufacture vaping products for their personal use.

Under section 234.2, any person that receives for sale, offers for sale, sells, distributes or is in possession of an unstamped vaping product is in contravention of the Act. This could result in a penalty of 200% of the applicable duty.

Under section 233.3, any person that is not a vaping product licensee that imports vaping products into Canada without stamping the products is in contravention of the Act. This could result in a penalty of 200% of the applicable duty.

Under section 238.1, any person that cannot account for any vaping excise stamps that they have been issued is liable to a penalty of $5 per stamp, or $10.00 per stamp in respect of a specified vaping province.

Other offenses and penalties may apply for non-compliance with the Act.

Further information

For all technical publications related to excise duties, go to Excise duties technical information.

To request an excise duty licence for vaping products, contact your regional excise office. These offices are listed at Contact Information – Excise and Specialty Tax Directorate.

For all enquiries on the application of excise duty to vaping products, call 1‑866‑330‑3304 or go to Excise duty on vaping products. 

For information on how to request a ruling or interpretation related to the application of excise duty to vaping products, go to Requesting an Excise and Specialty Tax Ruling or Interpretation.

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