Making Tax-Exempt Tobacco Sales
When you sell tobacco exempt of tax on First Nations land as an Exempt Sale Retail Dealer (ESRD), you must:
Sell tobacco that was purchased tax-exempt (e.g. cigarettes and fine cut tobacco that bears the federal black stock mark)
Ensure the amount of tobacco you sell to the eligible purchaser is within the sales limit
First Nations Individuals
A First Nations individual is an individual who is an “Indian” under the Indian Act (Canada) and whose property is exempt from taxation under section 87 of the Indian Act (Canada) or a provision of a final agreement equivalent to that section.
Crown-Indigenous Relations and Northern Affairs Canada (CIRNAC) issues a Secure Certificate of Indian Status card (SCIC) to each individual registered as an Indian under the Indian Act (Canada) provided they apply for the card. Some Band offices may issue a paper-laminate or plastic Certificate of Indian Status card.
The following Treaty First Nations governments and their members have Certificate of Indian Status cards, but are not eligible to purchase tax-exempt tobacco:
577, Tsawwassen First Nation
Nisga’a First Nation
- 671, Village of Gingolx
- 677, Village of New Aiyansh
- 678, Village of Laxgalt’sap
- 679, Village of Gitwinksihlkw
Effective May 1, 2019, Maa-nulth First Nation
- 663, Huu-ay-aht First Nations
- 638, Ka:’yu:’k’t’h’/Che:k’tles7et’h’ First Nations
- 666, Toquaht Nation
- 667, Uchucklesaht Tribe
- 668, Ucluelet First Nation
Band has the same meaning as in section 2 of the Indian Act (Canada).
Direct purchases of tobacco made in the name of a band on First Nations land are eligible for an exemption from tobacco tax. For example, a band is exempt from tobacco tax if the invoice is specifically made in their name.
An individual can purchase tobacco on behalf of a band if the individual has written authorization from the band to act for them.
The authorization must:
- Show the band name and number
- Be signed by an appropriate band official
- State the tobacco is for band use
First Nations individuals and bands are only exempt from paying tobacco tax when they purchase tobacco for personal use. Personal use does not include:
- Purchases made on behalf of a person who would not be eligible to purchase tax-exempt tobacco directly
- Purchases by a non-eligible person who is paying for tobacco requested by a First Nations individual
- Purchases for resale to another person, even if that other person is eligible for the exemption
- Purchases for business use in a corporation, cooperative, tribal council or band-empowered entity
If you believe that tobacco isn’t being purchased for the personal use of a First Nations individual or band, you must not sell tax-exempt tobacco.
There are limits to the amount of tax-exempt tobacco you can sell to an eligible purchaser. You can sell a maximum of:
- 2 cartons per day
- 8 cartons per month
- The equivalent of any of the above (e.g. 200 grams of loose tobacco = 1 carton)
This 2/8 rule applies to all tax-exempt tobacco. Frequent sales to the same purchaser at the limit are not a normal pattern and may indicate the tobacco purchased is not for personal use.
Purchasers can request prior approval to purchase more than the 2-carton daily limit by sending an email or fax to us at 250 387-1852. They can’t request to purchase more than their monthly limit. The request should contain details of why the purchase is needed.
The purchaser will provide you with a special authorization number once an authorization is approved. You must record this number on your signature sheet.
You must record every tax-exempt tobacco sale you make on the Schedule of Exempt Tobacco Sales (FIN 361), also known as signature sheets.
You must submit the signature sheets, along with an Exempt Sale Retail Dealer Return, each month by the due date. Contact us if you need a supply of signature sheets.
When an individual with a Certificate of Indian Status card is requesting to purchase tax-exempt tobacco, you must:
Ensure the individual is an eligible purchaser
Ensure the photograph on the status card is your purchaser
Record the individual’s name, Certificate of Indian Status registration number and quantity of tobacco purchased on the signature sheet
Obtain the purchaser’s signature on the signature sheet at the time of sale
Ensure this signature matches the signature on the status card
You may accept an expired Certificate of Indian Status Card or Temporary Confirmation of Registration Document (TCRD) ) issued by CIRNAC as proof the individual qualifies to purchase tax-exempt tobacco if the individual provides an additional government-issued photo identification.
Visit CIRNAC for more information on the Temporary Confirmation of Registration Document or Secure Certificate of Indian Status card.
Sales to a Band on First Nations Land
For direct sales to a band, you must:
Record the band’s name, 3-digit number and quantity of tobacco purchased on the Schedule of Exempt Tobacco Sales (Fin 361)
Obtain the signature of the band’s representative who takes possession of the tobacco
When presented with an individual’s written authorization to act for the band, you must:
Verify the individual’s identification matches the name of the individual authorized by the band
Obtain the signature of the individual purchasing on behalf of the band on the signature sheet
Record the band’s name, 3-digit number and quantity of tobacco are on the signature sheet
Duty-free shops are intended only for customers who are about to leave Canada. For more information on sales and reporting for duty-free shops, refer to Canada Border Services Agency.
Last revised: April 10, 2019