Coordinated Vaping Duty System

Excise Duty Notice EDN95

May 2024

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
• Definitions
• Coordinated vaping duty system
  • Specified vaping province
• Imposition and payment of additional vaping duty on vaping products
  • Proposed rates of additional vaping duty – Effective July 1, 2024
  • Additional vaping duty – Importation by an individual for personal use
  • Additional vaping duty on vaping products taken for use in a specified vaping province
  • Additional vaping duty on unaccounted vaping products in a specified vaping province
  • Stamping requirements for vaping products
  • Reporting requirements for vaping excise stamps
  • Filing returns and remitting duty on vaping products
• Transitional rules
• Amendments to current regulations
  • Regulations Respecting the Possession of Tobacco, Cannabis or Vaping Products That Are Not Stamped
  • Stamping and Marking of Tobacco, Cannabis and Vaping Products Regulations

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 vaping 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.

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.

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 have been paid.

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:

• a device that produces emissions in the form of an aerosol and is intended to be brought to the mouth for inhalation of the aerosol
• a vaping pod or another part that may be used with the vaping device referred to above

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:

• a vaping substance that is not contained within a vaping device
• a vaping device that contains a vaping substance

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

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.

Coordinated vaping duty system

The coordinated vaping duty system provides for the payment, collection and remittance of additional vaping duty and any provisions relating to the additional vaping duty imposed under those provisions or to any refunds in respect of the additional vaping duty.

The system results in an increase in the total duty collected on vaping products as an additional vaping duty is imposed on vaping products entering the duty-paid market in specified vaping provinces.

To show that the additional vaping duty for a specified vaping province has been paid, a vaping excise stamp for the specified vaping province must be affixed in a prescribed manner to vaping products entering the duty-paid market of the specified vaping province.

For provinces that have not joined the coordinated vaping duty system, a peach-coloured Canada vaping excise stamp continues to be required to be affixed to vaping products in those provinces.

Specified vaping province

The following jurisdictions have entered into coordinated vaping taxation agreements with the federal government and are therefore specified vaping provinces under the Excise Duties and Vaping Products Regulations:

• Ontario
• Quebec
• Northwest Territories
• Nunavut

Imposition and payment of additional vaping duty on vaping products

Effective July 1, 2024, 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 rate of additional vaping duty is determined under Schedule 8 to the Act.

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

The additional vaping duty on products stamped in Canada is payable to the CRA at the time of stamping.

The additional vaping duty on imported stamped products is payable at the time of importation to the Canada Border Services Agency (CBSA).

Proposed rates of additional vaping duty – Effective July 1, 2024

The rates of additional vaping duty imposed on vaping liquids under section 158.58 are:

• $1.12 per 2 millilitres (mL) or fraction thereof for the first 10 mL of vaping substance in the vaping device or immediate container
• $1.12 per 10 mL, or fraction thereof, for amounts over the first 10 mL

The rates of additional vaping duty imposed on vaping solids under section 158.58 are:

• $1.12 per 2 grams (g), or fraction thereof, for the first 10 g of vaping substance in the vaping device or immediate container
• $1.12 per 10 g, or fraction thereof, for amounts over the first 10 g

Additional vaping duty – Importation by an individual for personal use

Effective July 1, 2024, under section 158.58, an additional vaping duty is imposed on vaping products that are imported by an individual for their personal use, if the individual is a resident in a specified vaping province.

Additional vaping duty on vaping products taken for use in a specified vaping province

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

Additional vaping duty on unaccounted vaping products in a specified vaping province

Under subsection 158.61(2), an additional vaping duty is imposed on vaping products in a specified vaping province, on which additional vaping duty has 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 additional vaping duty is payable by the vaping product licensee responsible for the vaping products at the time the vaping products cannot be accounted for. 

Stamping requirements for vaping products

Effective July 1, 2024, a vaping product to be entered in the duty-paid market of a specified vaping province must be affixed with a vaping excise stamp for that specified vaping province to indicate that additional vaping duty for the specified vaping province has been paid.

Vaping excise stamps for a specified vaping province must be affixed to:

• vaping products that are manufactured in Canada and that are stamped after June 2024
• packaged vaping products that are imported by a vaping product licensee for stamping in Canada by the vaping product licensee and that are stamped after June 2024
• any other imported stamped vaping products that are imported or released after June 2024

For additional information, refer to Excise Duty Notice EDN80, Overview of Vaping Excise Stamps.

Reporting requirements for vaping excise stamps

Under the coordinated vaping duty system, inventories of vaping excise stamps must be reported by jurisdiction.

Vaping product licensees registered for the vaping stamping regime must report on their vaping excise stamp inventories on a calendar month basis by completing Form B600, Vaping Duty and Information Return.

Vaping prescribed persons registered for the vaping stamping regime must report on their vaping excise stamp inventories on a calendar month basis by completing Form B601, Vaping Information Return – Prescribed Person.

Subsection 206(2.2) requires every person that has been issued an excise stamp to keep all records that are necessary to determine the receipt, retention, location, use or disposition of the stamp. This requirement applies to vaping product licensees and vaping prescribed persons with respect to vaping excise stamps. Under subsection 206(7), every person that is required to keep records must keep them for six years after the end of the year to which they relate.

Filing returns and remitting duty on vaping products

Under section 160, every vaping product licensee must file Form B600, for each calendar month and calculate, report and remit any vaping duty payable. The return and any applicable vaping duty are due by the end of the following month.

Similarly, under the coordinated vaping duty system, additional vaping duty must be calculated, reported and remitted for each specified vaping province on the same return. The return and any applicable additional vaping duty are due by the end of the following month.

When importing stamped packaged vaping products, vaping duty is payable to the CBSA at the time of importation. If the products are stamped for a specified vaping province, additional vaping duty is also payable to the CBSA at that time.

Transitional rules

To facilitate the implementation of the coordinated vaping duty system, the Excise Duties on Vaping Products Regulations include transitional provisions from July 1, 2024, until September 30, 2024.

The transitional provisions apply to:

• vaping products that are manufactured in Canada and that are stamped before July 2024
• packaged vaping products that are imported by a vaping product licensee for stamping in Canada by the vaping product licensee and that are stamped before July 2024
• any other imported stamped vaping products that are imported or released before July 2024

During the transitional period, the possession, distribution, removal and sale of vaping products affixed with a peach-coloured Canada vaping excise stamp will continue to be permitted in the duty-paid market of a specified vaping province.

Effective October 1, 2024, all vaping products to be sold in the duty-paid market of a specified vaping province must be stamped with a vaping excise stamp for the specified vaping province.

For example, vaping products manufactured and stamped in Canada prior to July 2024 and intended for sale in Ontario can be sold with a peach-coloured Canada vaping excise stamp, and therefore without an Ontario-specific vaping excise stamp, until September 30, 2024. All vaping products stamped on or after July 1, 2024, and intended for sale in Ontario must be stamped with an Ontario-specific vaping excise stamp. Effective October 1, 2024, all vaping products that are intended for sale to consumers in Ontario must be stamped with an Ontario-specific vaping excise stamp.

Amendments to current regulations

Regulations Respecting the Possession of Tobacco, Cannabis or Vaping Products That Are Not Stamped

A person may possess vaping products in a specified vaping province that are not stamped for that particular province if the vaping products are to be sold or offered for sale to consumers in another province. If the other province is a specified vaping province, the vaping products must be stamped for that province to indicate that the additional vaping duty for that province has been paid.

An individual may possess vaping products that are not stamped for their specified vaping province if those products are for their personal use and were purchased in another province.

Stamping and Marking of Tobacco, Cannabis and Vaping Products Regulations

Effective May 8, 2024, under subsection 4.11(1) of the Stamping and Marking of Tobacco, Cannabis and Vaping Products Regulations, the financial security calculation is the greater of either:

• the total of:
  • $2 multiplied by the number of vaping excise stamps in respect of any specified vaping province that are either:
    • in the possession of the vaping product licensee or the vaping prescribed person at the time of application for stamps
    • to be issued in respect of the application
  • $1 multiplied by the number of vaping excise stamps, not in respect of any specified vaping province that are either:
    • in the possession of the vaping product licensee or the vaping prescribed person at the time of application for stamps
    • to be issued in respect of the application
• $5,000

The maximum amount of financial security is $5 million.

Vaping excise stamps considered to be in the possession of a person include stamps:

• physically in the possession of the vaping product licensee or the vaping prescribed person that are not affixed to products
• affixed to products that have not yet been accounted for on the vaping product licensee’s monthly vaping duty and information return (Form B600) or the vaping prescribed person’s monthly vaping information return (Form B601).
• purchased and currently in transit from the authorized stamp provider

Further information