Taxes & Rebates - Frequently Asked Questions (FAQs)

Tobacco Tax Act - Budget 2015 Change:
Tobacco Tax Rate Increase (effective October 28, 2015)

Index

See also:  Tobacco Tax Act Special Notice Vol. 3, No. 17, Tobacco Tax Increase.


Tobacco Tax Rate Increase - General Questions

When are the new tobacco rates effective?

As part of Budget 2015 (October), the new tobacco rates are effective 12:01 a.m. on October 28, 2015. Additional information relating to the tobacco tax rate changes has been posted in the Taxes & Rebates section of the Alberta Treasury Board and Finance website.

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Why has the tax rate on cigars increased?

The cigar tax rate has been increased in the same proportion as the increase to the cigarette tax rate.  It is Alberta’s policy to keep the tax treatment of tobacco products consistent. This is part of the Creating Tobacco-free Futures: Alberta’s Strategy to Prevent and Reduce Tobacco Use 2012 - 2022 initiative.

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Why is loose tobacco taxed more than cigarettes?

It takes less than one gram (on average about 0.67 of a gram) of loose tobacco to make one cigarette. To provide tax parity amongst tobacco products, loose tobacco is taxed higher than cigarettes.

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I am a tobacco tax collector. Why was I not given more notice about having to count my inventory on October 28, 2015?

As the rate change is an Alberta Budget issue, the announcement could not be made until the Budget was introduced in the Legislative Assembly.

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I noticed that the price of cigarettes and other tobacco products seemed to increase immediately upon the announcement that the tobacco tax rates had changed. Is this correct?

Generally the new tax rates are to be applied to new inventories received by the retailer subsequent to 12:01 a.m. on October 28, 2015.  Possible factors that could impact the price of tobacco at a retail store at a particular point in time include the level of inventory a retailer had on hand at the time of the tax rate change announcement, the location of the store, or market forces.

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Tobacco Tax Rate Increase - Alberta Indian Tax Exemption (AITE) Exempt Sale Retailers

How do the tax rate changes affect me as an AITE exempt sale retailer?

An AITE exempt sale retailer may apply to TRA for a refund of tobacco tax paid when the tobacco is sold tax-out to eligible AITE consumers, provided that the tobacco was purchased by the retailer tax-in. Information packages were sent on October 28, 2015 to all paper-based AITE exempt sale retailers to inform them of the refund process. AITE Direct (POS) system retailers have been informed of the changes through the POS system.

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I did not receive an information package on the tax rate increase and used the old rates on the paper vouchers after the announcement. What do I do now?

To accommodate the existing inventory turnover and to reduce compliance costs, TRA will process claims for the period ending Sunday, November 1, 2015 using the old tax rates, as you likely will be selling old inventory during that period. Claims for periods starting after November 1, 2015 will be calculated using the new tax rates.

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I did not update the rate changes on my AITE Direct (POS) system. What do I do now?

To accommodate the existing inventory turnover and to reduce compliance costs, your claim for the weekly claim period ending Sunday, November 1, 2015 will be processed using the old tax rate, as you likely will be selling old inventory during that period. Claims for periods starting after November 1, 2015 will be calculated using the new tax rates. If you did not update your POS system by November 2, 2015 for the new weekly claim period, then please update it immediately. If you need help, please check with your AITE Direct Vendor.

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Has the two-carton per week purchase limit changed?

No, the two-carton per week purchase limit has not changed. A person who purchases in a calendar week more than 400 cigarettes or tobacco sticks, or any combination of tobacco that would give rise to the same amount of tax, must advise the seller that the weekly limit has been exceeded and inform the seller how the tobacco will be used.

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I also sell Alberta marked products. Does the new rate apply to these products as well?

Yes. The price of marked products should include the tax rate change effective 12:01 a.m. on October 28, 2015 on new inventory purchased at the higher tax rate.

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What is black stock tobacco?

Black stock tobacco products are cigarettes, tobacco sticks and fine cut tobacco that are sold tax exempt under the AITE program, and are marked with peach-coloured stamps. The words “DUTY PAID CANADA DROIT ACQUITTE” appear on the stamp. This type of product is sold only to eligible AITE cardholders or at duty free shops.

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I ordered tobacco products yesterday from my supplier and these will be delivered to my store after the effective date of the tax rate increase.  Will these products reflect the new rates?

Yes. However, we expect that you will be selling the old inventory during the weekly period ending November 1, 2015. To accommodate the existing inventory turnover and to reduce compliance costs, TRA will process claims using the old tax rates, as you likely will be selling old inventory during that period. Claims for periods after November 1, 2015 will be processed at the new tax rates.

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Page last updated: April 2, 2017