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Tax and Revenue Administration
Tobacco Tax Act
Information Circular TTA-5R
6


Released: September 14, 2012
Produced by: Alberta Treasury Board and Finance, Tax and Revenue Administration
For more information: tra.revenue@gov.ab.ca

TTA-5R6 / September 2012

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.

TOBACCO TAX ACT INFORMATION CIRCULAR:
ADMINISTRATION

This information circular discusses the following topics:

Records

Wholesalers, importers and retailers

  1. Every wholesaler, importer or retailer is required to keep any record and book used for tobacco tax collection. The records are expected to provide information for accurate determinations of:

    • tobacco tax to be collected,
    • black stock tobacco transactions,
    • transactions in tobacco marked for tax-paid sale in Alberta, and
    • transactions in tobacco other than black stock not marked for tax-paid sale in Alberta.

  2. Wholesalers, importers and retailers are to make their records and books available for review by Alberta Treasury Board and Finance, Tax and Revenue Administration (TRA). Records that should be retained by a wholesaler, importer or retailer include:
  • purchase orders;
  • invoices from tobacco suppliers;
  • receiving reports;
  • records of periodic physical inventory counts;
  • sales invoices showing delivery date, customer name and address;
  • accounts receivable ledger cards; and
  • shipping documents; such as bills of lading.
  1. Wholesalers, importers and retailers are required to keep records at their places of business in Alberta unless otherwise authorized in writing by TRA. All records must be retained for a period of four years from the end of the last fiscal year to which they relate unless written permission has been obtained from TRA to destroy them earlier. All records relating to an objection or an appeal must be kept until the matter is resolved and the time for filing any further appeal has expired.

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Manufacturers of tear tape

  1. Alberta implemented a new tobacco marking system effective April 1, 2012 with transition period up to September 30, 2012. As of October 1, 2012, new red Alberta stamps will be required to be used for marking instead of the red tear tape. Licences authorizing the production of tear tape will no longer be issued by TRA. However, records of previously licensed tear tape manufacturers are to be kept for a period of four years from the end of the fiscal year to which they relate.

Objections and Appeals

  1. The Tax Services branch of TRA considers objections to the following:
  • assessment of tobacco tax, interest or penalties;
  • refusal to issue or renew a licence;
  • suspension or cancellation of a licence;
  • refusal to register;
  • suspension or cancellation of a registration;
  • refusal to issue a refund.
  1. A separate notice of objection (form AT4762) should be completed for each action. Send the objection:
    • in the form authorized by TRA
    • by registered mail
    • within 90 days of the day of mailing of the notice of the action leading to the objection

to:

Tax Services
Tax and Revenue Administration
Alberta Treasury Board and Finance
2nd Floor, 9811 - 109 Street
EDMONTON, Alberta
T5K 2L5

  1. A tax analyst will review the objection and will either confirm, vary or vacate the (re)assessment, or confirm or vacate the refusal, suspension or cancellation. TRA will notify the objector of the decision in writing.

  2. Obtain notice of objection forms online or by telephoning 780-427-3044 (Edmonton calling area); toll-free within Alberta: 310-0000, then 780-427-3044. 

  3. If you are dissatisfied with the decision to your objection,you may file an appeal with the Court of Queen's Bench of Alberta within 90 days of the date of mailing of the response to the notice of objection. Also, if you have not received a response from Tax Services within 90 days of the filing of the notice of objection you may file an appeal directly to the Court. In both cases, the appeal must be served on the Minister and a copy filed with the Clerk of the Court.

  4. The Court may confirm, vary or vacate the (re)assessment leading to the appeal or confirm or vacate the refusal, suspension or cancellation leading to the appeal. The Court may make an order relating to costs.

  5. A decision of the Court of Queen's Bench of Alberta may be appealed to the Court of Appeal of Alberta and, ultimately, to the Supreme Court of Canada.

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Refunds of Tobacco Tax

Uncollectible accounts

  1. A tax collector may apply for a refund of the tobacco tax paid where tobacco was sold on credit to a retailer or another wholesaler and all or a portion of the debt associated with the sale has become uncollectible. A debt is not uncollectible unless all reasonable efforts to collect the debt have been made unsuccessfully.

  2. To qualify for a refund, you must not be related to, or associated with, the debtor. You may request a refund for a debt that has been identified as uncollectible under the Income Tax Act (Canada) and eligible for a deduction from your income for a year. Where the uncollectible debt is owed by a retailer or wholesaler in receivership or bankruptcy, you are required to have filed a claim for the debt with the receiver or trustee in bankruptcy to qualify for a refund of the tax.

  3. If the debtor has been placed in receivership or petitioned into bankruptcy, notify TRA within 30 days of the day you were notified of the receivership or bankruptcy.

  4. TRA must receive an application for a refund of the tobacco tax within 90 days of the earlier of:

    • the date you received a notice of bankruptcy or notice appointing a receiver, or
    • the date you identified the debt as uncollectible for income tax purposes.

  5. Submit an application (form AT346) together with all sales invoices, ledger cards and any other records and documents to support that you delivered tobacco sold on credit, that you remitted the tax on the sale, and that the debt is uncollectible, as shown by:

    • in a bankruptcy, a copy of the notice of bankruptcy received from the trustee;
    • in a receivership, a copy of the notification from the receiver;
    • in any other situation, a summary of the steps taken to collect the debt, and the date the receivable was written off.

  6. TRA will determine the amount of tax to be refunded based on the information provided with the application.

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Stolen or destroyed tobacco

  1. A tax collector or retailer may apply for a refund of tobacco tax remitted where the tobacco has been stolen or destroyed before being sold to a consumer.

  2. To receive a refund, you are required to:

    • notify TRA of the loss within 30 days of the day you first became aware of the loss;

    • apply for the refund on form AT346 (for tax collectors) or form AT 4771 (for retailers) within one year of when you first became aware of the theft or destruction;

    • attach the following applicable records to the claim to show the quantity of tobacco stolen or destroyed:
  • inventory records;
  • purchase orders and invoices;
  • receiving reports;
  • sales invoices;
  • insurance claims or police reports applicable to the stolen or destroyed tobacco; and,
  • other records necessary to satisfy TRA of the amount of tax applicable to the stolen or destroyed tobacco;
  • in the case of theft, proof that the theft was reported to the police; and
  • in the case of fire, proof that the fire was reported to the fire department.
  1. TRA may refund tax for stolen or destroyed tobacco despite the claimant not reporting the loss to TRA within 30 days of its discovery if the failure to comply does not prevent TRA from collecting the tax from another person.

Stale-dated tobacco

  1. A tax collector or retailer may apply for a refund of tobacco tax remitted where the tobacco has been stale-dated and cannot be returned to the manufacturer or supplier.

  2. To receive a refund:
  • notify TRA within 30 days of when you first became aware of the stale-dated tobacco;
  • apply for the refund on form AT346 (for tax collectors) or form AT4771 (for retailers) within one year of when you first became aware of the stale-dated tobacco;
  • keep the tobacco in a dry and secure location until arrangements can be made with TRA for its destruction;
  • attach the following supporting documents to the claim:
    • types of stale-dated tobacco and information regarding when the tobacco became stale-dated;
    • quantity of stale-dated tobacco;
    • purchase orders and invoices from the manufacturer or supplier;
    • proof of tobacco tax paid on the stale-dated tobacco.
  1. A TRA representative will verify the stale-dated tobacco according to the supporting documents and facilitate arrangements for witnessing the destruction of tobacco.

Recoveries

  1. If you received a refund under paragraphs 13 to 21 above and subsequently recovered part of the loss, you will be required to repay TRA its pro-rata share of the recovery.

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