The Excise Act, 2001’s framework for excise duties on vaping items is administered and enforced by the Canada Revenue Agency (CRA). Excise taxes are imposed within this system, and they usually apply to vaping items that are imported or made in Canada with the intention of being sold on the duty-paid market. Regardless of whether a vaping product contains nicotine or not, it is subject to the vaping duty.
Modifications to the Excise Act of 2001 regarding e-cigarettes
Licence for vaping products
The Excise Act of 2001 permitted a licence holder for vaping goods to import unstamped products for subsequent manufacture up until January 1, 2024.
Effective January 1, 2024, paragraph 14(1)(f) will permit a licensee of vaping products to import packaged vaping products for the purpose of stamping them in Canada, subject to parliamentary approval. It won’t be necessary to manufacture anything more.
Anybody who plans to import vaping products into Canada for stamping, including vaping prescribed persons, will be required by proposed legislation to apply for a vaping product licence and fulfil the eligibility requirements outlined in the Regulations Respecting Excise Licences and Registrations. Following royal assent of the implementing law, a permit to manufacture vaping products in Canada that is only intended for stamping will be implemented.
See Excise Duty Notice EDN79, Obtaining and Renewing a Vaping Product Licence, for comprehensive details on licencing regulations for vaping products.
Product packaging and stamping for vaping
Section 158.46 stipulated that a vaping product licensee had to stamp all vaping products meant for the duty-paid market at the time of packing in order to prove that the vaping duty had been paid before January 1, 2024.
As per the proposed legislation, which will take effect on January 1, 2024, subsection 158.46(1) will permit licensees who package vaping products manufactured in Canada to stamp the products by the end of the second calendar month after the month in which the products were packaged, provided that the packaging was done after 2023.
Additionally, imported packaged vaping items will need to have their stamps applied by the end of the second calendar month after the month in which the products were released under the Customs Act, as per the proposed legislation’s insertion of paragraph 158.46(2). The facility of the vaping product licensee will have to receive the imported vaping products directly for stamping. This will be applicable to goods released (as that term is defined in Customs Act subsection 2(1)) or imported into Canada after 2023.
Products without stamps to be exported, stored, or given to authorised representatives
Section 158.49, which was in effect before January 1, 2024, stipulated that a vaping product licensee must promptly place vaping items into their excise warehouse if the products are made in Canada and are not stamped by the licensee at the time of packaging.
Subsection 158.49(1), subject to parliamentary approval, will mandate that vaping products packaged after 2023 and made in Canada be entered into the licensee’s excise warehouse by the end of the second calendar month after the month in which they were packaged if they are not stamped by that date.
Additionally, under the proposed legislation, imported packaged vaping products must be entered into the licensee’s excise warehouse by the end of the second calendar month after the calendar month in which they were released under the Customs Act after 2023 if they are not stamped by that date.
Subsection 158.5(1.1) of the proposed legislation, which takes effect on January 1, 2024, mandates that vaping product markings and other prescribed information be printed on containers containing vaping products that are being removed from a vaping product licensee’s premises for export or delivery to an accredited representative. Therefore, provided vaping products are correctly marked, they may be exported or delivered straight from the premises of a vaping product licensee to an accredited representative before the end of the second calendar month after the month in which they were packaged.
Drugs that are vaped will still be exempt from the aforementioned stamping requirements.
See Excise Duty Notice EDN79 for comprehensive details on acquiring an excise warehouse licence.
Imports that are not compatible
According to subsections 158.51(1) and (2), an imported vaping product that is meant for the duty-paid market shall be placed in a sufferance warehouse for stamping if it is not correctly stamped at the time of importation.
Subsection 158.51(3) will be altered by proposed legislation, which will take effect on January 1, 2024, to state that packaged vaping products that are imported by vaping product licensees for their own stamping are exempt from these subsections.
This amendment will take effect for vaping items that are published (as that term is defined in paragraph 2(1) of the Customs Act) or imported into Canada after 2023.
Imports – Delivery to premises for stamping
Section 158.511 of the Excise Act, 2001 will be added as a result of proposed legislation, which will take effect on January 1, 2024. This will require licence holders of vaping products that import packaged products for stamping in Canada to deliver the products to their licenced premises as soon as the Canada Border Services Agency releases them.
This amendment will take effect for vaping items that are released (as defined in paragraph 2(1) of the Customs Act) or imported into Canada after 2023, pending parliamentary approval.