and Revenue Administration
Tobacco Tax Act
Information Circular TTA-2R3
|Last Updated :
||February 9, 2017
||Alberta Treasury Board and Finance,
Tax and Revenue Administration
|For more information:
/ October 2009
The Tobacco Tax Amendment Regulation (December 15, 2011) implements changes to Alberta's tobacco marking requirements. They come into effect April 1, 2012. For more information, see Special Notice Vol. 3 No. 14, Changes to Tobacco Marking Requirements. Tobacco tax publications are in the process of being updated to reflect the new stamping regime.
NOTE: This information circular is intended to explain legislation and provide specific information. Every effort has been made to ensure the contents are accurate. However, if a discrepancy should occur in interpretation between this information circular and governing legislation, the legislation takes precedence.
The Government of Alberta recognizes that many First Nations people and communities in the province prefer not to describe themselves as Indians/Indian bands. These terms have been used where necessary to reflect their legal meaning in the federal Indian Act.
TOBACCO TAX ACT INFORMATION CIRCULAR:
OFFENCES, PENALTIES AND ENFORCEMENT
This information circular provides
information on the following topics:
- Consumers are required to pay tax on tobacco at the time of purchase. If, as a consumer, you do not pay the tax you are guilty of an offence. On conviction for a first offence, you may be fined up to $10,000, jailed up to 30 days, or both fined and jailed. On conviction for a second or subsequent offence, you could be fined up to $30,000, jailed up to six months, or both fined and jailed.
- Only those consumers with the Alberta Indian Tax Exemption (AITE) card or consumers purchasing tobacco products at duty-free stores are allowed to buy or be in possession of black stock tobacco products in Alberta. Black stock tobacco products are cigarettes, tobacco sticks and fine cut tobacco marked as required by federal legislation to show duty has been paid. It is not marked for retail sale in a particular province. If you illegally possess black stock, on conviction for a first offence you could be fined up to $10,000, jailed up to 30 days, or both fined and jailed. If convicted a second or subsequent time, you could be fined up to $30,000, jailed up to six months, or both fined and jailed. For more information on black stock, see the Alberta Indian Tax Exemption (AITE) series of information circulars.
- It is also an offence for you to be in possession of more than 200 cigarettes, 200 tobacco sticks or 200 grams of manufactured tobacco not marked for tax-paid sale in Alberta, unless you:
- are a wholesaler or importer with written permission from TRA to possess, store or sell these products;
- have a receipt showing Alberta tax was paid when the tobacco was brought into Alberta through an entry port, or received by mail from a place outside Canada; or
- are in possession of tobacco purchased in another province or territory with a copy of the return filed with TRA, reporting and paying the tobacco tax.
If you are convicted of illegally possessing more than the above limit of tobacco product, you may be fined up to $10,000, jailed up to 30 days, or both fined and jailed for a first offence. On conviction for a second or subsequent offence, you could be fined up to $30,000, jailed up to six months, or both fined and jailed.
For more information on Alberta's tobacco marking program see Information Circular TTA-1, Overview of Tobacco Tax.
- It is an offence for you to have more than 1,000 cigarettes or tobacco sticks, more than 1,000 grams of fine cut tobacco, cigars containing more than 1,000 grams of tobacco or any combination containing more than 1,000 grams of tobacco unless you:
- have a permit; or
- are a licensed wholesaler, licensed importer, retailer or marking permit holder or are holding the tobacco on behalf of any of them.
If you are found guilty of a first offence of having more than the 1,000 grams of tobacco limit, you may be fined up to $20,000, jailed up to six months, or both fined and jailed. On a second or subsequent conviction, you could be fined up to $50,000, jailed up to a year, or both a fined and jailed.
- No one is allowed to purchase tobacco for less than the Alberta tax payable and any applicable federal taxes and duties or from a person who is not a retailer, licensed wholesaler or importer. Anyone convicted of the offence may be fined or jailed as described in paragraph 11.
- A person selling tobacco to consumers must collect the tax owing on that sale and remit it to a tax collector or, if required, directly to the Minister.
- A wholesaler, importer, or retailer is required to purchase, possess, store, sell or offer for sale only tobacco products marked for tax-paid sale in Alberta, unless given written permission otherwise from the Minister. This provision applies to both black stock tobacco products and those marked for sale in other jurisdictions. The only retailers who may handle black stock are exempt-sale retailers or duty-free shops. Requirements for the sale and purchase of black stock are listed in the AITE series of information circulars.
- No one is allowed to sell tobacco for resale without a valid wholesaler's licence from TRA. A licensed wholesaler may sell tobacco to a consumer if the Minister permits it. Only a licensed importer may import or bring tobacco into Alberta for resale or for sale to a consumer.
- A retailer may buy tobacco only from a wholesaler or importer with a valid licence.
- No one is allowed to sell tobacco for less than the Alberta tax payable and any applicable federal taxes and duties.
- If convicted of any of the offences described in paragraphs 5 to 10, above, you may be:
- fined up to $20,000, jailed up to six months, or both fined and jailed for a first offence;
- fined up to $50,000, jailed up to one year, or both fined and jailed for a second or subsequent offence;
- given a penalty up to three times the amount of tax that:
- you should have collected and remitted if selling tobacco to consumers;
- as a wholesaler, importer or retailer you should have paid under the Tobacco Tax Act (the Act) for tobacco marked for tax-paid sale in Alberta and sold to a consumer in Alberta; or
- you would have been required to pay if you had sold the tobacco to a consumer.
Penalties specific to the possession and sale of black stock are outlined in Information Circular AITE-4, Offences and Penalties.
- If you mark tobacco without a permit, or you hold a valid permit, but refuse or neglect to mark tobacco as required, you could be fined up to $1,000,000, jailed up to three years, or both fined and jailed on conviction for the offence.
- If you hold a permit to mark tobacco, but do not follow all conditions or restrictions stated in the permit or specified in the Tobacco Tax Regulation, you could be fined up to $20,000 on conviction for the offence.
- If you have permission from TRA to handle tobacco that is not marked for tax-paid sale in Alberta, but do not follow all conditions and restrictions specified in the authorization, legislation and regulations you may be fined up to $20,000 on conviction for the offence.
- TRA may issue a demand specifying the records you must keep, if you do not maintain records and books of account as required under the Act. If you have been issued the demand and still do not maintain the specified records, you may be fined $50 for each day you did not comply. For details on records required under the Act, and retention periods, see Information Circular TTA-5, Administration.
- If you do not submit a return as required, TRA may assess a late filing penalty against you equal to the greater of:
- $25 for each day of default, or
- five per cent of any unpaid tax for the filing period as of the filing due date of the return
to a maximum penalty of $1,000.
- If you are convicted of not filing a return as required by the Act, or not providing information or producing the documents required by the Act or regulations you may be fined $50 for each day of default.
- If, in the opinion of the Minister, your neglect, carelessness, wilful default, fraud or evasion has resulted in an amount owing to the Crown, TRA may assess a penalty against you of 50 per cent of the amount owing.
- You could be fined up to $20,000, jailed up to two years, or both fined and jailed if you make, participate in, agree, or submit to, making false or deceptive statements, destroy or alter records, make false or deceptive entries or omissions, wilfully attempt to evade compliance with the Act or the regulations, or do not comply with an order or direction of the Minister.
Offences under the Procedures Regulation
- In certain circumstances, as an alternative to the above penalties that could be imposed by the court, officers may issue violation tickets under the Procedures Regulation:
- $500 for a consumer not paying tax on purchases of tobacco.
- for unauthorized possession or purchase of black stock:
- $250, for 400 cigarettes or grams of tobacco or less, or
- $500, for between 400 and 1000 cigarettes or grams of tobacco.
- $250 for unauthorized possession of between 200 and 1200 cigarettes or grams of tobacco not marked for tax-paid sale in Alberta.
- $500 for unauthorized sale of black stock by an exempt sale retailer.
- $1000 for possession of between 1000 and 3000 cigarettes or grams of tobacco.
- TRA auditors are authorized by the Minister to conduct inspections and audits of records for tobacco tax or Alberta's tobacco marking. They are authorized to enter premises and require the owner or manager of the premises to give all reasonable assistance and make reasonable efforts to answer questions the auditor may have relating to the administration of the Act. Alberta Gaming and Liquor Commission staff conducts investigations under the Act.
Search and Seizure
- Normally, an officer must have a warrant before searching premises. However, under the Act the officer may stop a vehicle or enter any place, other than a personal residence, without a warrant and search and seize any records or other evidence if the officer has:
- reasonable grounds to believe there has been a contravention of the Act or the regulations, and
- that obtaining a search warrant would cause a delay that could result in the loss or destruction of evidence.
- The Act also permits an officer to seize a vehicle, if the officer has reasonable grounds to believe that it was used in the contravention of the Act or the regulations. If the registered owner is not present when the vehicle is seized, notice is given to him/her as soon as possible after the seizure.
- If charges under the Act are not laid, seized items are returned to the owner within a reasonable time. If the owner of the seized property is convicted for an offence under the Act, seized items may become Crown property as part of the penalty for the offence or, if the judge so declares, returned to the convicted person.
- Where the judge has ordered that seized property be returned, the convicted person is required to apply to the Clerk of the Court for the return of the seized items after the period for filing an appeal has ended.
TRA Collection Procedures of Amount Owed to the Crown
- Taxes, penalties, interest and other amounts owing under the Tobacco Tax Act are debts recoverable by the Crown. If a person does not pay the amount owing, TRA can seize assets or "garnishee" amounts owing to the person. As set out below, this action can be taken without a court hearing.
- TRA can register a certificate of the amount owing with the Court of Queen's Bench. The certificate has the same authority as a judgment of the court. Once a certificate is registered, TRA can register a writ and seize the debtor’s assets. Costs related to the action, interest and the amount of the registered debt are recoverable from the debtor.
- TRA can intercept monies owed to the debtor by a third party including banks, credit unions or other similar persons. To do this TRA serves a "Requirement to Pay by Third Party" notice on the person who owed the funds to the debtor, requiring that the funds be sent to TRA instead of to the debtor. This includes monies owed jointly to the debtor and other persons. Normally under a "garnishee" issued according to a judgment the funds are paid to the court. Under this provision, however, the funds must be paid directly to TRA and TRA does not share the funds received with judgment creditors. If the third party does not pay the funds to TRA, and pays someone else instead, then the third party becomes liable for the amount it should have paid to TRA.
Time Extensions and Security
- Persons unable to pay as required and seeking a time extension must contact TRA’s Collections unit. TRA may grant a short-term arrangement for payment, if satisfied that immediate payment in full is not feasible and the amount owing is for the person’s most recently completed taxation year. An extension will not be granted unless TRA is convinced that immediate payment would cause extreme hardship. Interest continues to grow on the unpaid balance.
- If a person is unable to make immediate full payment, TRA may request security for the amount owing. The acceptance of security by TRA does not relieve the person of the obligation to pay amounts owing under any arrangements agreed to by TRA. The full cost of providing security is borne by the person and interest continues to grow on the unpaid balance.
- Requests for return of security held by TRA must be made in writing. The difference between the total value of the security and the amount owing by the person will be returned.
- Both the tax collector and its responsible representative are responsible for ensuring that any obligation or duty required under the Act is carried out.