Tax Interpretation Manual: Tobacco Tax Act - Sections

Section 1 - Definitions

TTA - SEC. 1/Assessment/Int.

Assessment

Interpretation

Effective June 5, 1992, Bill 31, Finance and Corporate Relations Statutes Amendment Act, 1992, amended the definition of assessment to clarify that an assessment includes a reassessment. This provided the branch with a clear legislative basis for the long-standing administrative practice of issuing an adjusted assessment when new information is received that shows the actual tax liability is greater than or less than the amount originally assessed.

TTA - SEC. 1/Collector/Int.

Collector

References: Section 2(8); Regulations 4(6), 13(1), 13(3), 13(4), 13(5)

Interpretation (Revised: 2009/03)

Before June 30, 1992, only the minister could appoint collectors.

Effective June 30, 1992, Bill 69, Taxation Statutes Amendment Act, 1992, amended the definition of "collector" to be a person appointed by the director to act as agent of the minister to collect the tax imposed by the Act.

TTA - SEC. 1/Dealer's Permit/Int.

Dealer's Permit

References: Sections 5, 6, 7

Interpretation (Revised: 2009/03)

Effective June 22, 1992, Bill 69, Taxation Statutes Amendment Act, 1992, added a definition of "dealer's permit". A dealer's permit is a permit issued under Section 6 to sell tobacco at retail or wholesale or both.

TTA - SEC. 1/Mistake Of Law/Int.

Mistake Of Law

Interpretation (Revised: 2009/03)

Effective May 1, 2008, Bill 11, Small Business and Revenue Statutes Amendment Act, 2008, repeals the definition of "mistake of law."

TTA - SEC. 1/Retail Price/Int.

Retail Price

References: Sections 2, 3

Interpretation (Issued: 2010/03)

Effective March 3, 2010, Bill 2, Budget Measures Implementation Act, 2010, added a definition of "retail price." Retail price is defined in relation to cigars as the price for which the cigar was purchased by a consumer, including a price in money, the value of services rendered, and any other consideration accepted by the person who sold the cigar.

The definition of retail price is relevant under both the definition of taxable price in Section 2 and the application of tax under Section 3.

TTA - SEC. 1/Tax/Int.

Tax

Reference: Section 10; Section 22; Section 32.2

Interpretation (Issued: 2016/01)

Effective March 25, 2015, Bill 13, Finance Statutes Amendment Act, 2015 amended section 1 by adding a definition for "tax" and a new subsection (3). The amounts noted in the definition of tax can be administered as if they were tax.

For example, a penalty may be imposed on amounts owing by a person who purchases tobacco or an interest in a business through a bulk transaction for failure to pay the amount. If the amount was not included in the definition of tax a penalty could not be imposed on the amount.

The new subsection (3) sets out when a person is deemed to be carrying on business in British Columba.

TTA - SEC. 1/Tobacco/Int. - R.1

Tobacco

Interpretation (Revised: 2009/03)

Effective June 30, 1995, Bill 33, Finance and Corporate Relations Statutes Amendment Act, 1995, clarified that raw leaf tobacco is included in the definition of "tobacco" and is, therefore, subject to tax under the Act. This amendment was necessary because the existing definition of tobacco defined tobacco to mean tobacco products in any form that may be consumed by a consumer. It could have been argued that raw leaf tobacco did not fit this definition because it must be cut before it can be consumed.

R.1 Tobacco Leaves (Revised: 2009/03)

Whole tobacco leaves, which have been dried and only require shredding, fall within the definition of "tobacco" and are subject to the provisions of the Act.

Similarly, tobacco leaves that are intended to be combined with another product by consumers before they are consumed fall within the definition of "tobacco" and are also subject to the provisions of the Act.

Section 2 - Tax on Consumer

TTA - SEC. 2(1) - (3)/R.1 - R.4

2(1) - (3)

R.1 Tobacco Tax Rates (Revised: 2010/03)

Effective March 10, 1981, tobacco tax rates were indexed every six months using formulas based on the most recent tobacco prices in Vancouver as reported in Statistics Canada's Consumer Price Index. Wholesale dealers were notified of any changes to the tax rates.

On May 22, 1991, the Act was amended to set the tax rate at 8¢ per cigarette and at 6.1¢ per gram for loose tobacco. This was done to bring B.C.'s tobacco tax rates in line with those of other provinces. These rates were in effect for the period May 22, 1991 to August 31, 1991.

To ensure that this increase was carried forward to future semi-annual tax rate adjustments, the formulas in the Act were also amended. For cigarettes, the amended formula maintained the tax rate at approximately 41 percent of the average selling price, up from 39 percent. For loose tobacco, the amended formula maintains the tax rate at approximately 76 percent of the tax on cigarettes.

Effective March 18, 1992, Bill 4, Budget Measures Implementation Act, 1992, eliminated indexing of the tax rate on cigarettes.

The following tables present the applicable tax rates under the Tobacco Tax Act (formerly the Cigarette and Tobacco Tax Act) from the date of its enactment on February 5, 1971.

Table 1 - Tax on Cigars, February 5, 1971 to March 26, 1976

Tax/cigar at price of

0-7¢

+7-15¢

+15-22¢

+22-32¢

+32-42¢

+42¢

Feb 05/71 - Mar 26/76

 
Table 1.1 - Tax on Cigars March 27, 1976 to Present

Tax/cigar at price of

0-5¢

+5-9¢

+9-13¢

+13-17¢

+17-25¢

+25-33¢

+33-41¢

+41-49¢

+49¢

Mar 27/76 - Apr 10/78

10¢

12¢

15¢

Apr 11/78 - Mar 09/81

10¢

16¢

20¢

24¢

30¢

Mar 10/81 - Aug 31/81

10¢

16¢

20¢

24¢

55%

Sep 01/81 - Jul 07/83

10¢

16¢

20¢

24¢

55%

Jul 08/83 - Mar 31/85

13¢

20¢

25¢

30¢

70%

Apr 01/85 - Mar 24/88

10¢

14¢

22¢

28¢

33¢

77%*

Mar 25/88 - Mar 30/98

10¢

14¢

22¢

28¢

33¢

77%**

 

* Of the retail price. ** Of the retail price up to $2.50/cigar. This amendment only affects cigars selling for $3.25 or more per cigar.

Effective March 31, 1998, all cigars are taxed at 77 percent of the retail selling price, and the maximum tax payable per cigar is increased from $2.50 per cigar to $5.00 per cigar. The single tax rate replaces the eight tax categories previously imposed on cigars.

Effective March 3, 2010, cigars are taxed at 77 percent of the taxable price under Section 2 or 77 percent of the retail price under Section 3. The maximum tax payable per cigar is increased from $5.00 to $6.00. See TIM/SEC. 2(1) - (3)/R.4/Tax on Cigars and TIM/SEC. 3/Int.-R.2/Tax on Tobacco Brought into BC.

Table 2 - Cigarette Tax, February 5, 1971 to Present



Effective Dates


Tax per
Cigarette

Tax per Carton of 200

Feb 05/71 - Mar 26/76

8/25 of 1¢

$0.64

Mar 27/76 - Apr 10/78

12/25 of 1¢

$0.96

Apr 11/78 - Mar 09/81

24/25 of 1¢

$1.92

Mar 10/81 - Aug 31/81

34/25 of 1¢

$2.72

Sep 01/81 - Feb 28/82

35/25 of 1¢

$2.80

Mar 01/82 - Aug 31/82

37/25 of 1¢

$2.96

Sep 01/82 - Feb 28/83

38/25 of 1¢

$3.04

Mar 01/83 - Jul 07/83

40/25 of 1¢

$3.20

Jul 08/83 - Aug 31/83

50/25 of 1¢

$4.00

Sep 01/83 - Feb 29/84

50/25 of 1¢

$4.00

Mar 01/84 - Aug 31/84

56/25 of 1¢

$4.48

Sep 01/84 - Feb 28/85

59/25 of 1¢

$4.72

Mar 01/85 - Mar 31/85

62/25 of 1¢

$4.96

Apr 01/85 - Aug 31/85

68/25 of 1¢

$5.44

Sep 01/85 - Feb 28/86

80/25 of 1¢

$6.40

Mar 01/86 - Aug 31/86

86/25 of 1¢

$6.88

Sep 01/86 - Feb 28/87

93/25 of 1¢

$7.44

Mar 01/87 - Aug 31/87

97/25 of 1¢

$7.76

Sep 01/87 - Feb 29/88

102/25 of 1¢

$8.16

Mar 01/88 - Mar 24/88

104/25 of 1¢

$8.32

Mar 25/88 - Aug 31/88

113/25 of 1¢

$9.04

Sep 01/88 - Feb 28/89

120/25 of 1¢

$9.60

Mar 01/89 - Aug 31/89

125/25 of 1¢

$10.00

Sep 01/89 - Feb 28/90

144/25 of 1¢

$11.52

Mar 01/90 - Aug 31/90

155/25 of 1¢

$12.40

Sep 01/90 - Feb 28/91

159/25 of 1¢

$12.72

Mar 01/91 - May 21/91

166/25 of 1¢

$13.28

May 22/91 - Aug 31/91

200/25 of 1¢

$16.00

Sep 01/91 - Feb 29/92

235/25 of 1¢

$18.80

Mar 01/92 - Mar 26/92

256/25 of 1¢

$20.48

Mar 27/92 - Mar 30/93*

10.5¢

$21.00

Mar 31/93 - Feb 19/02

11¢

$22.00

Feb 20/02 - Feb. 18/03

15¢

$30.00

Feb 19/03 - Dec 19/03

16¢

$32.00

Dec 20/03 - Feb 17/09

17.9¢

$35.80

Feb 18/09- present

18.5¢

$37.00

 

* Effective March 27, 1992, the indexing formulae used to determine new tax rates on March 1 and September 1 each year were repealed.

Table 3 - Tax on Tobacco Other Than Cigarettes and Cigars, February 5, 1971 to March 31, 1989
Effective Dates Amount of tax per:
1/2oz or portion 25g or portion

Mar 27/76 - Apr 10/78

 -

Apr 11/78 - Mar 09/81

5½¢

10¢

Mar 10/81 - Aug 31/81

7½¢

14¢

Sep 01/81 - Feb 28/82

14½¢

Mar 01/82 - Aug 31/82

8½¢

15½¢

Sep 01/82 - Feb 28/83

8½¢

15½¢

Mar 01/83 - Jul 07/83

16½¢

Jul 08/83 - Aug 31/83

11½¢

21¢

Sep 01/83 - Feb 29/84

11½¢

21¢

Mar 01/84 - Aug 31/84

13¢

24¢

Sep 01/83 - Feb 28/85

14¢

25¢

Mar 01/85 - Mar 31/85

14½¢

26¢

Apr 01/85 - Aug 31/85

16¢

28½¢

Sep 01/85 - Feb 28/86

18½¢

33½¢

Mar 01/86 - Aug 31/86

20¢

36¢

Sep 01/86 - Feb 28/87

21½¢

39¢

Mar 01/87 - Aug 31/87

22½¢

40½¢

Sep 01/87 - Feb 28/88

23½¢

42½¢

Mar 01/88 - Aug 31/88

24¢

43½¢

Sep 01/88 - Feb 28/89

25½¢

46½¢

Mar 01/89 - Mar 31/89*

27¢

48½¢

 

* Effective the end of the day on March 31, 1989, the tax rate on loose tobacco products is calculated on a per gram basis rather than a per 25 gram or per 1/22 ounce basis (see Table 4). Where tobacco products are packaged in ounces or pounds, tax must be remitted on the equivalent gram weight.

Table 4 - Tax on Tobacco Other Than Cigarettes and Cigars, April 1, 1989 to Present

Effective Dates

Amount of tax per gram:

Apr 01/89 - Aug 31/89

3.8¢

Sep 01/89 - Feb 28/90

4.4¢

Mar 01/90 - Aug 31/90

4.8¢

Sep 01/90 - Feb 28/91

4.9¢

Mar 01/91 - May 21/91

5.1¢

May 22/91 - Aug 31/91

6.1¢

Sep 01/91 - Feb 29/92

7.2¢

Mar 01/92 - Mar 26/92

7.9¢

Mar 27/92 - Mar 30/93 *

8.0¢

Mar 31/93 - Mar 25/97

8.4¢

Mar 26/97 - Feb 19/02

11.0¢

Feb 20/02 - Feb 18/03

15.0¢

Feb 19/03 - Dec 19/03

16.0¢

Dec 20/03 - Feb 17/09

17.9¢

Feb 17/09 - present

18.5¢

 

* Effective March 27, 1992, the indexing formulae used to determine new tax rates on March 1 and September 1 each year were repealed.

R.2 Tax on Preportioned Manufactured Tobacco Sticks (Revised: 2009/03)

Preportioned tobacco sticks are packaged and sold in units consisting of tobacco sticks, tobacco tubes, including filters, and combiner. The combiner is used to make the sticks and the tubes into cigarettes.

Effective March 31, 1998, tobacco sticks are defined as cigarettes and subject to tax at the same rate as cigarettes.

Before March 31, 1998, the Ministry did not consider tobacco sticks to be cigarettes because they cannot be smoked by themselves. The Ministry viewed their sale as a sale of fine cut tobacco. Tax applied on a cents per gram basis as for other fine cut tobacco products (see Table 4 above for the applicable tax rates).

The Ministry considered the entire sale to be of tobacco and therefore not subject to tax under the Social Service Tax Act (see R.3 below).

R.3 Applying Tobacco Tax and Social Service Tax to Cigarette Kits

Where loose tobacco or preportioned tobacco sticks are packaged and sold in units consisting of tobacco or tobacco sticks, tobacco tubes (including filters), and a machine to make the finished cigarettes, tobacco tax and social service tax apply as follows.

  • In all cases, tobacco tax applies to the tobacco portion of the kit.
  • If the non-tobacco components of the kit are itemized separately, social service tax applies only to the value of the non-tobacco components.
  •  If the components of the kit are not separately itemized and the pre-tax value of the tobacco is 50 percent or more of the total selling price of the kit, social service tax will not apply to the kit.
  • If the components of the kit are not separately itemized and the pre-tax value of the tobacco is less than 50 percent of the total selling price of the kit, social service tax applies to the total value of the kit.

R.4 Tax on Cigars (Issued: 2010/03)

Prior to March 3, 2010, cigars were taxed at 77 percent of the retail price of the cigar to a maximum of $5.00 per cigar. This meant that when a wholesale dealer sold cigars to a retail dealer, they were required to collect security equal to 77 percent of the retail price of the cigars. However, this scheme created uncertainty because the eventual retail price was unknown to the wholesale dealer.

To provide certainty in such situations, effective March 3, 2010, Bill 2, Budget Measures Implementation Act, 2010, amended the Act.

Under section 2, the tax on cigars is 77 percent of the "taxable price" to a maximum of $6.00. Note: the tax on a consumer under section 3 remains 77 percent of the retail price. See TIM/SEC. 3/Int.-R.2/Tax on Tobacco Brought into BC.

A definition of "taxable price" is added under Bill 2. If the retail dealer who sells the cigar also manufactured the cigar in Canada or imported the cigar into Canada, then the taxable price is the retail price.

In all other cases, the taxable price is the wholesale price of the cigar plus 30 percent of the wholesale price.

Subsections (1.2) and (1.3) are added effective March 3, 2010. These subsections provide a method for determining the wholesale price.

The new cigar tax formula makes the Act consistent with other provinces' approach to taxing cigars.

TTA - SEC. 2(8) - (10)/Int.

2(8) - (10)

Interpretation (Revised: 2009/03)

Effective April 1, 1989, Bill 33, Finance and Corporate Relations Statutes Amendment Act, 1995, amended the Act to clarify that only dealers appointed as collectors under the Act are authorized as agents to collect and remit the tax.

This amendment was added to counteract the 1994 BC Supreme Court Decision in the case of E&S Liquidators. In that decision, the court ruled that, under the wording of the Act a person who sold tobacco at wholesale was an agent for collecting tax whether the wholesaler was registered or not. Therefore, when the retailer paid the unregistered wholesaler for tobacco, the court ruled that the retailer had satisfied its obligation to remit tax collected. This decision removed the province's ability to assess retailers for tax due on tobacco purchased from unregistered wholesalers who have not collected and remitted the tax.

This amendment also added subsection 2(10), which clarifies that retail dealers who purchase tobacco from unregistered wholesalers remain liable for collecting and remitting the tax due on the retail sale of the tobacco. This applies even if the retail dealer has paid money to the wholesaler as, or on account of, the tax collectible on subsequent retail sales.

These amendments were made retroactive to 1989 to protect revenue losses, to limit refund claims and to allow the province to make assessments if tobacco was purchased from unregistered wholesalers.

TTA - SEC. 2(10.1)/Int.

2(10.1) NON-REGISTERED WHOLESALERS

Interpretation (Revised: 2009/03)

Section 2(10.1) was repealed in 1998 by S.B.C. 1998-36-9.

Effective July 28, 1997, Bill 36, Tobacco Tax Amendment Act, 1997, enacted Section 2(10.1) which imposed an obligation on non-registered wholesalers to remit tax on sales of tobacco to retailers.

TTA - SEC. 2(11)/Int.

2(11) MONEY RECEIVED DEEMED TAX OWING

Interpretation (Revised: 2009/03)

Effective March 23, 1994, Bill 19, Taxation Statutes Amendment Act, 1994, added subsection 2(11), which establishes that the first money received on a taxable sale is considered to be the tax owing. This amendment was consequential to the proportional refund for bad debts established in Section 16 by the same bill.

Effective June 30, 1995, Bill 33, Finance and Corporate Relations Statutes Amendment Act, 1995, clarified that the first money received from a consumer in a taxable sale is considered to be the tax owing by the purchaser. This amendment is consequential to the establishment of a security payment system.

Effective July 28, 1997, Bill 36, Tobacco Tax Amendment Act, 1997, amended subsection 2(11) by establishing that any money received by a dealer, other than security paid to a wholesale dealer under Section 12, up to the full amount of tax owing, is deemed to be the tax due on that sale.

TTA - SEC. 2(12)/Int.

2(12) Tax Collected In Error Must Be Remitted

Interpretation (Issued: 2000/07, Revised: 2009/03)

Effective April 1, 2000, Bill 3, Budget Measures Implementation Act, 2000, amends subsection 2(12) to require amounts collected as tax be remitted to the province. This includes amounts collected as tax by mistake. This amendment protects revenue. It does so by providing the province with the money to refund a purchaser who has incorrectly paid tax.

Section 3 - Tax on Tobacco Brought Into BC

TTA - SEC. 3/Int. - R.2

Interpretation (Revised: 2010/03)

Section 3 of the Act requires persons who reside or ordinarily reside in the province and who bring, send, acquire, or receive tobacco in the province from outside the province to report the matter to the director in writing and remit the taxes that would have been payable on the tobacco if it had been purchased in the province.

Effective October 1, 1992, federal customs officers began collecting British Columbia tobacco tax (and liquor mark-ups) at international border crossings. Bill 73, Revenue Statutes Amendment Act, 1992, amended the Tobacco Tax Act to provide for the payment of tax to customs officers as agents for the provincial government. Federal customs agents do not collect provincial tax on duty-free tobacco

Effective July 30, 1993, Bill 46, Tobacco Tax Amendment Act, 1993, amended the Act to enable the collection of provincial tobacco tax by federal postal agents on tobacco mailed into the province from outside of the province, once the province and the federal government enter an agreement for such collection. To date, no such agreement has been signed and federal postal agents do not collect provincial tobacco tax.

Effective March 3, 2010, Bill 2, Budget Measures Implementation Act, 2010, amended the Act to provide that the amount of tax payable by a consumer who brings or sends a cigar into British Columbia or acquires or receives delivery of a cigar in British Columbia is 77 percent of the retail price of the cigar to a maximum of $6.00 per cigar. This amendment maintains the previous application of tax, but was required due to the introduction of the definition of "taxable price" for the purposes of Section 2.

R.1 Mail Order Cigarettes - Collection and Assessment Procedures (Revised: 2009/03)

In the early 1990s, the federal government and the eastern provinces significantly lowered tobacco tax rates in those provinces to combat international tobacco smuggling. The western provinces did not lower their tax rates. This created a significant price differential between cigarettes sold in the eastern provinces and the western provinces. As a result, sellers located outside British Columbia began selling cheaper cigarettes from eastern Canada to consumers in British Columbia through the mail and though courier companies.

Under Section 3(2), a consumer who receives delivery of tobacco in the province must report the matter in writing to the director and pay tax in the same amount as if the product had been purchased in the province. Where tax has not been paid as required, the director has the authority to make an assessment for the tax due plus penalty and interest under Section 22.

R.2 Federal Tobacco Act

Effective April 25, 1997, the federal Tobacco Act prohibits the sale of tobacco from one province to another except between manufacturers and retailers. This Act also prohibits advertising an offer to deliver a tobacco product from one province to another, or to mail a tobacco product.

Section 5 - Prohibition Against Selling Tobacco Without A Permit

TTA - SEC. 5/Int.

Interpretation (Revised: 2009/03)

All persons who sell tobacco products in the province at wholesale, for resale or at retail are required to have a valid permit issued by the branch.

Effective June 22, 1992, Bill 69, Taxation Statutes Amendment Act, 1992, amended Section 5 to strengthen the existing prohibitions regarding permits.

Section 5(1) states all persons who make retail sales of tobacco must have a valid retail dealer's permit or authorization to make retail sales.

Section 5(2) states all persons who make wholesale sales of tobacco must have a valid wholesale dealer's permit.

Section 5(3) states tobacco for resale may only be sold to persons who have a valid dealer's permit. Ensures that wholesalers may only sell tobacco inventory to persons possessing a valid dealer's permit.

Section 5(5) states tobacco for resale may only be acquired from a person who is a registered wholesale dealer. This ensures that retail dealers obtain their inventory from a wholesale dealer who has a valid permit.

Section 5(6) states no one may participate or acquiesce in a contravention of this section.

Effective June 30, 1995, Bill 33, Finance and Corporate Relations Statutes Amendment Act, 1995, added the following subsection.

Section 5(4) prohibits a person from selling tobacco at a location for which the person's dealer's permit or authorization has been suspended or cancelled. This amendment is consequential to the addition of subsections 7(2) and (3) added by the same bill. Those subsections permit the director to restrict a suspension or cancellation to locations where infractions occur. Before these amendments, a suspension of a dealer's permit or authorization for infractions at one of the dealer's locations required that the dealer's right to sell tobacco from all its locations be suspended or cancelled. This could be unfair to businesses, particularly where the infraction was committed by an employee and was not a reflection of corporate policy.

Section 6 - Dealer's Permits

TTA - SEC. 6/Int. - R.1

Interpretation (Revised: 2016/01)

Effective June 22, 1992, Bill 69, Taxation Statutes Amendment Act, 1992, added Section 6 to the Act.

Section 6(1) authorizes the director to issue retail dealer permits and wholesale dealer permits.

Section 6(2) establishes that dealers' permits cannot be transferred from one person to another. This ensures that all persons who wish to sell tobacco products must apply for a permit.

Section 6(3)(a) requires dealers to keep their permit at their principal place of business. This allows purchasers to know that the dealer is properly registered to sell tobacco products in the province.

Section 6(3)(b) requires permit holders to show their permit to the director or to persons designated by the director. This ensures that Consumer Taxation Branch officials may verify that a person selling tobacco products is in possession of a dealer's permit.

Effective July 28, 1997, Bill 36, Tobacco Tax Amendment Act, 1997, added the following subsections.

Section 6(4) establishes a provision under which the director may require an applicant for a tobacco permit to post a bond as a condition of granting the permit. A bond may be required where there is significant risk the applicant will not comply with the tax collection requirements of the Act. A significant risk would occur where that applicant has a history of non-compliance with the Act, or where the applicant's permit was previously cancelled for non-compliance.

Effective April 1, 2000, Bill 3, Budget Measures Implementation Act, 2000, amends subsection 6(4) to remove the requirement that there be significant risk of lack of compliance by a seller or a class of sellers before requiring a bond.

As wholesale dealers may collect up to several million dollars in taxes each month, there is always significant risk to provincial revenues in the event of a bankruptcy or receivership. To protect revenues, the Ministry has adopted the administrative policy of requiring all new wholesale dealer registrants to post a bond as a condition of obtaining a wholesale dealer permit. The maximum bond amount is an amount equal to 6 times the tax that is normally collected by the dealer each month.

Section 6(5) defines the director's powers in relation to the bond, by reference to Section 37. Section 37 provides the director cannot require a bond that exceeds 6 times the tax, or the estimated tax, that would normally be collected by the dealer in a month.

Effective February 14, 2004, Bill 6, Taxation Statutes Amendments Act, 2004 adds Section 6(6) to authorize the director to refuse to issue a dealer's permit if the application for the dealer's permit is in respect of a location where an authorization or dealer's permit held by another person was suspended or cancelled by the director under the Act, and there is evidence satisfactory to the director that the applicant for the dealer's permit is not at arm's length from that person.

Effective September 1, 2007, BC Reg. 232/2007 brings into force Section 6(7) which was added by Bill 12, Tobacco Sales (Preventing Youth Access to Tobacco) Amendment Act, 2006. This subsection prohibits the director to issue a dealer's permit in respect of a location to which a prohibition order under the Tobacco Sales Act applies.

Effective November 23, 2007, BC Reg. 389/2007 amends Section 6(7) which was amended by Bill 10, Tobacco Sales (Banning Tobacco and Smoking in Public Places and Schools) Amendment Act, 2007. The reference to the Tobacco Sales Act is replaced with the Tobacco Control Act.

Effective March 25, 2015, Bill 13, Finance Statutes Amendment Act, 2015 amends section 6 by repealing and replacing subsections (4) and (5). The amendment provides that the director may require a bond before issuing a dealer's permit. In addition, the director may refuse to issue the dealer's permit if the bond is not provided by a date specified by the director.

R.1 Exempt Sale Retail Dealers

For information on Exempt Sale Retail Dealer (ESRD) permits, see GR. 5. For information on sales to Indians, see GR. 3.

Section 7 - Refusal, Suspension, And Cancellation Of Dealer's Permits

TTA - SEC. 7/Int.

Interpretation (Revised: 2016/01)

Effective June 22, 1992, Bill 69, Taxation Statutes Amendment Act, 1992, added Section 7 to clarify and strengthen the provisions for refusing, suspending or cancelling a dealer's permit.

Effective June 30, 1995, Bill 33, Finance and Corporate Relations Statutes Amendment Act, 1995, amended subsections 7(2) and 7(3) to permit the director to restrict a suspension or cancellation to the location where the infraction occurred. Under the previous wording, a suspension of the permit for infractions at one of the dealer's outlets required that the dealer's right to sell tobacco from all its locations be suspended or cancelled. This was unfair to dealers, particularly if infractions were committed by employees and did not reflect corporate policy.

Effective May 1, 2008, Bill 11, Small Business and Revenue Statutes Amendment Act, 2008 adds subsections 4.1, 4.2, 4.3, 4.4 and 6 to expand the director's authority to cancel a permit or retail authorizations for reasons other than non-compliance.

Subsection 7(4.1) requires the director to cancel a person's dealer's permit in circumstances prescribed by regulation. This subsection was added to authorize the cancellation of permits that are no longer in effect due to Agreements between the government and First Nations People, such as permits to sell tobacco exempt from tax on former Nisga'a reserve lands that are no longer in effect after June 1, 2008.

Subsection 7(6) provides for no right of appeal if the director must cancel a permit under subsection 4.1. There is no need for a right of appeal because the cancellation of permits sunder subsection 4.1 stems from the provisions of the Agreements that are negotiated and agreed upon between the government and First Nations People. For example, the cancellation of permits on former Nisga'a reserve lands stems from the provisions of the Nisga'a Final Agreement, negotiated in 2000.

Effective March 25, 2015, Bill 13, Finance Statutes Amendment Act, 2015 amends section 7 by adding subsections (2.1) and (3.1). The amendment provides for suspension and cancellation by the director of dealer's permits and retail authorizations held by persons who refuse or neglect to comply with a requirement of the director to deposit a bond under section 37 of the Act.

The amendment allows the director to account for the risk of non-payment of an amount to government and enforce the requirement to provide a bond while a dealer holds a dealer's permit.

Section 8 - Limit on Tobacco Purchased For Resale

TTA - SEC. 8/Int.

Interpretation (Revised: 2009/03)

Effective August 18, 1995, B.C. Reg. 352/95 brought into force Section 8 of the Act, which was added by Bill 55, Miscellaneous Statutes Amendment Act (No.3), 1994.

This amendment enables the director to limit regulations, on the quantity of tax-exempt tobacco dealers may purchase for resale to consumers, and to set different limits for different types of tobacco, or for different dealers or classes of dealers. Under subsections 23(1) and (4), also added by Bill 55, the limits may be appealed to the minister. Subsection 44(2)(g) authorizes establishing limits by regulation.

This legislation supports the existing administrative practice of limiting the amount of exempt tobacco available in the province to what would reasonably be consumed by the legitimate market for exempt tobacco products and works in conjunction with the Exempt Sale Retail Dealer (ESRD) permit system.

Section 9 - Suspension Under Tobacco Sales Act

TTA - SEC. 9/Int.

Interpretation (Revised: 2009/03)

Effective June 8, 1995, Bill 21, Tobacco Sales Amendment Act, 1995, added Section 9 to the Act. Bill 21 dealt primarily with Ministry of Health initiatives to stop sales of tobacco to minors. As a consequential amendment, Section 9 provides that the director must suspend a dealer's permit to sell tobacco under the Tobacco Tax Act on receipt of a suspension certificate from the administrator of the Tobacco Sales Act. Such certificates are issued for violations of the Tobacco Sales Act.

Since December 1995, the branch has regularly received certificates from the administrator under the Tobacco Sales Act. When such a certificate is received, the branch sends a letter to the dealer, with a copy to the administrator, Tobacco Sales Act. The dealer is advised of the suspension, its length and the prohibition against sale during suspension. The branch also sends a letter to the administrator confirming the suspension. When the suspension period has expired, the branch informs dealers by mail that they may resume sales.

Effective July 15, 1999, Bill 97, Miscellaneous Statutes Amendment Act (No. 3), 1999, amends the Act to require the director to give the administrator under the Tobacco Sales Act notice confirming issue of a suspension, the retailer's name, the business location and the suspension period. This amendment is necessary because Section 13 of the Tobacco Tax Act prohibits Ministry staff from disclosing information except in specified circumstances, such as in the course of administering the Tobacco Tax Act. The amendment allowed the director to disclose information to Ministry of Health staff for the purposes of administering the Tobacco Sales Act.

Effective September 1, 2007, BC Reg. 232/2007 amends Section 9(1) which was amended by Bill 12, Tobacco Sales (Preventing Youth Access to Tobacco) Amendment Act, 2006. The section required that, on receiving a copy of a prohibition order under Section 10.2 of the Tobacco Sales Act, the director was required to suspend the permit or authorization for the location and period specified in the order.

Effective November 23, 2007, BC Reg. 389/2007 amends Section 9(1) which was amended by Bill 10, Tobacco Sales (Banning Tobacco and Smoking in Public Places and Schools) Amendment Act, 2007. The reference to the Tobacco Sales Act is replaced with the Tobacco Control Act.

Under Section 9(1), when the director receives a copy of a prohibition order under Section 10.2 of the Tobacco Control Act, the director must suspend the permit or authorization for the location and period specified in the order. Section 9(2) provides that a suspension under Section 9 can be made without advance notice to a dealer.

Section 10 - Sale In Bulk

TTA - SEC. 10/Int.

Interpretation (Issued: 2016/01)

Effective March 25, 2015, Bill 13, Finance Statutes Amendment Act, 2015 repealed and replaced section 10. The previous version of the provision prohibited a dealer from disposing of their stock through a bulk transaction without first obtaining a clearance certificate. Under the new provision, there is no direct obligation on either the dealer or the purchaser to obtain a clearance certificate. However, if the purchaser does not obtain the certificate from the dealer, the purchaser becomes liable for an amount equal to the outstanding tax owed by the dealer.

The amendment makes the section consistent with similar provisions of other consumption tax statutes.

Additionally, the amendment clarifies that the liability of the purchaser is limited to the amount owing by the dealer under the Act in respect of the dealer's line of business in respect of which the bulk transaction took place.

Section 11 - Security

TTA - SEC. 11/Int. - R.2

Interpretation (Revised: 2009/03)

Effective April 1, 1989, wholesale dealers are required to make a security payment to the province on all tobacco products delivered to them, or apply to the director, Tobacco Tax Act, for a pre-authorized exemption. This security payment replaces the prepayment previously required under the legislation.

The amount of the security payment required is equal to the tax that would be collectable if the tobacco were sold to a consumer in the province.

The director is authorized to exempt wholesale dealers from the requirement to make a security payment if satisfied the tobacco products in question will not be sold at a taxable retail sale in BC

Effective June 30, 1995, Bill 33, Finance and Corporate Relations Statutes Amendment Act, 1995, added subsections 11(3) to 11(6).

Subsections 11(3) to 11(6) operate in conjunction with Section 12, which requires retailers to pay security to wholesale dealers.

Subsection 11(3) establishes that a security payment made to the Crown by a wholesaler is refundable if the tobacco is not sold to a consumer in the province or if the tobacco is sold to another wholesale dealer. A refund is provided because the tax with respect to which the security was paid only applies if the tobacco is sold to a consumer in the province.

Subsection 11(4) establishes that a security payment received from a wholesaler may be retained by the Crown in satisfaction of the wholesaler's obligation under the Act to collect and remit tax on sales to a consumer.

Subsection 11(5) establishes that if there is an increase in the tobacco tax rate, wholesalers are required to remit additional security in an amount equal to the additional tax collectible on the tobacco when it is resold to a consumer. If the tax rate decreases, wholesalers are eligible for a refund of part of the security already paid on the tobacco. The refund amount is equal to the difference between the security already paid on the tobacco and the security payable on tobacco sold after the tax rate decrease.

Subsection 11(6) authorizes a partial refund of security payments made by wholesalers on tobacco acquired before a tax rate decrease and not yet resold. The refund amount is equal to the difference between the security actually paid on the tobacco and the security payable on tobacco sold after the tax rate decrease.

R.1 Tobacco Shipped Out of Province - Refund of Security Payment (Revised: 2009/03)

Before April 1, 1989, wholesale dealers were not required to pay security on tobacco products shipped out of province. In some cases, this provision encouraged tax avoidance whereby tobacco on which a security was not paid was directed to in-province sales without collection of tax, or was sold out of province without payment of the receiving jurisdiction's tax.

Effective April 1, 1989, wholesalers must pay security on all tobacco products received in the province, including tobacco products which will be shipped out of province, unless the director has exempted the wholesale dealer from the requirement to make a security payment because the director is satisfied that the tobacco products in question will not be sold in BC (See Int.).

However, where tobacco products on which a wholesale dealer has made a security payment are shipped out of province, the wholesale dealer may apply to the director for a refund of the amount paid. The director is authorized to refund a security payment on tobacco products on receipt of satisfactory evidence that the tobacco was not sold in B.C.

R.2 Assessments of Wholesalers

For a discussion of the assessment of wholesalers for failure to pay security, see TTA/Sec. 22/R.1.

Section 12 - Security To Wholesale Dealer

TTA - SEC. 12/Int.

References:

Act: Section 1 "consumer", "director", "wholesale dealer"; Section 2; Section 11; Section 23

TTAR: Section 15; Section 35

Bulletin TTA 003; Bulletin TTA 004

Interpretation (Revised: 2016/01)

Effective March 25, 2015, Bill 10, Budget Measures Implementation Act, 2015 amended subsection 12(3) by adding "subject to the regulations" after "under subsection (2),". This amendment ensures that a retail dealer has not satisfied their obligation to remit tax until they have remitted any security required as a result of a tax rate change in accordance with TTAR section 15 [tax rate change and payment of security].

Effective June 30, 1995, Bill 33, Finance and Corporate Relations Statutes Amendment Act, 1995, provided statutory authority for the tax collection scheme already in place by providing for a system of security payments. Under the system, wholesalers pay the Crown a security equal to the tax due on the subsequent retail sale of tobacco they import or acquire for sale in the province. The wholesalers are reimbursed by charging a security to retailers to whom they sell tobacco. The retailer is, in turn, reimbursed from the tax collected on the subsequent retail sale of the tobacco. Section 12 was added as part of this amendment.

Subsection 12(1) requires a retailer to pay security to the wholesale dealer in an amount equal to the tax collectable on the sale of tobacco to a consumer in the province.

Subsection 12(2) permits a wholesaler who has paid security to the director and who has received security from a retailer to retain the amount received from the retailer. If the wholesaler does so, it is not obligated to collect tax from the consumer.

Subsection 12(3) provides that if a wholesaler retains the security paid by a retailer under subsection 12(1), then the retailer's obligation to remit tax on the retail sale is satisfied.

Subsection 12(4) requires the director to refund to a retail dealer the security paid under subsection 12(1) if the director is satisfied that (a) the tobacco with respect to which the security was paid was not sold to a consumer, and (b) the retail dealer has not and will not receive a refund of security from the wholesaler.

Subsection 12(5) provides that if the director has granted a refund to a retailer under Subsection 12(4), then the wholesale dealer who sold the tobacco to the retail dealer may not grant a refund to the retailer. The wholesaler is not eligible for a refund of the security the wholesaler paid to the province because the wholesaler retains the security received from the retailer.

Subsection 12(6) provides that retail dealers are not required to pay a security on tobacco acquired for retail sale to a consumer who is exempt from tax (e.g. tobacco acquired for sale to First Nations purchasers from retail outlets located on reserves).

Section 12.1 - Demand For Information

TTA - SEC. 12.1/Int.

Reference: Section 12.3

Interpretation (Issued: 2000/06, Revised: 2016/01)

Effective April 1, 2000, Bill 3, Budget Measures Implementation Act, 2000, amends the Act to provide statutory authority for the province to issue a demand notice requiring a person to provide information required to administer and enforce the Act.

The previous provisions allowed administrators to request information, but provided no recourse where a taxpayer refused to do so. The amendment enables the province to issue a formal demand for information to verify a person's compliance under the legislation and to confirm relevant information on assets subject to the statutory liens. For example, where collection action is being considered, information confirming the whereabouts and value of assets subject to statutory liens may be required.

Effective March 25, 2015, Bill 13, Finance Statutes Amendment Act, 2015 amends section 12.1 by removing a reference to a person authorized by the director, consequential to the addition of section 12.3 [Delegation] of the Act by this Bill.

The need to specify that a person authorized by the director may issue the demand notice is no longer required due to the general delegation authority provided under section 12.3.

Section 12.2 - Service Of Notices

TTA - SEC. 12.2/Int.

Interpretation (Issued: 2016/01)

Effective March 25, 2015, Bill 13, Finance Statutes Amendment Act, 2015 added section 12.2. The amendment to add section 12.2 provides rules for service of notices or other documents that are required or authorized to be served under the Act.

The Act requires different types of notices to be provided to taxpayers. Notices that must be served require their own rules to ensure they can be used in a court proceeding. The courts must be able to confirm that the notice was received by the taxpayer.

This is similar to the other consumption tax statues.

Section 12.3 - Delegation

TTA - SEC. 12.3/Int.

Interpretation (Issued: 2016/01)

Effective March 25, 2015, Bill 13, Finance Statutes Amendment Act, 2015 added section 12.3.

The amendment to add section 12.3 provides that the director may delegate any of the director's powers and duties to a named person or a class of persons.

The delegation of any of the director's authorities allows for a more efficient administration of the Act as it will not require the Minister to appoint a deputy director for the purpose of delegating other powers.

Section 13 - Confidentiality

TTA - SEC. 13/R.1 - R.3

Reference: Freedom of Information and Protection of Privacy

R.1 Confidentiality of Sources of Information (Revised: 2009/03)

Information collected under the Tobacco Tax Act is confidential.

The branch receives information regarding tax evasion, tax delinquencies and other taxation matters from a variety of sources, with the understanding that the source remain confidential.

Staff should not divulge the source of any information regarding taxation matters which comes to their attention in the course of performing their duties (see R.2).

R.2 Employees' Personal Liability (Revised: 2009/03)

Information provided to the branch is confidential. Information may only be used in accordance with established branch policy.

The province is liable for acts committed by its employees in the course of their employment. If staff disclose information to a person not entitled to it, then the party whose confidence was breached may sue the province.

Staff may be held personally liable for a breach of confidentiality.

Disclosing the name of a person who provides a tip or who is suspected to be in non-compliance with the Act may result in legal liability, including breach of the confidentially provisions of the Tobacco Tax Act.

To avoid this situation, check with your supervisor or manager if you are unsure whether to release specific information to a person.

R.3 Access to Branch Information and Records Under FIPPA (Revised: 2009/03)

On October 4, 1995, the Freedom of Information and Protection of Privacy Act (FIPPA) was amended to allow the provisions of FIPPA to prevail over the provisions of any other Act in case of inconsistency. This amendment affects the manner in which the branch deals with requests from persons seeking information or records about another taxpayer.

Previously, information or records about a specific taxpayer would not be released to a third party because the confidentiality sections of our statutes prohibited such release. This applied whether the request was oral or in writing. However, with the FIPPA amendment, records may now be released under a FIPPA request. These cases will have to be individually evaluated.

FIPPA states branch employees have a duty to assist applicants. When a person requests records about another taxpayer or requests information of a type that is contained in branch records, the staff member should advise the enquirer that the staff member cannot provide such information or records, but that a FIPPA request can be made for the records.

Section 15 - Allowance For Collectors

TTA - SEC.15/Int

References:

Act: Section 1 "collector"

TTAR: Section 14

Bulletin TTA 004

Interpretation (Issued: 2016/01)

Effective March 25, 2015, Bill 10, Budget Measures Implementation Act, 2015 repealed and replaced section 15. This amendment, along with the amendment to TTAR section 14 [collector's allowance], ensures there is sufficient legal authority for the existing practice of allowing collectors to retain an allowance if they pay security as required.

Section 16 - Deduction For Bad Debts

TTA - SEC. 16/Int.

Interpretation (Revised: 2016/01)

Before March 23, 1994, the Ministry's policy was that any money received by a collector or dealer was received on account of the tax first. The Ministry would provide a refund to the collector or dealer only if a purchaser made payments less than the tax owing.

Effective March 23, 1994, Bill 19, Taxation Statutes Amendment Act, 1994, added Section 16 to the Act to permit a proportional refund of tax remitted on sales that are subsequently written off as bad debts. The formula for calculating the refund is in Regulations 22(1) (formerly Regulations16.1, added by B.C. Reg. 199/94, which became effective March 23, 1994).

Effective June 9, 2015, Bill 13, Finance Statutes Amendment Act, 2015 repealed and replaced section 16. The amendment authorizes a dealer to make a deduction or claim a refund on the sale of tobacco when they write off the unpaid amount as unrealizable or uncollectable within 4 years of the date on which they remitted or paid tax or security on the tobacco.

The amendment prevents collectors and retail dealers from making a deduction and claiming a refund for the same amount.

The amendment makes the section consistent with similar provisions of the other consumption tax Acts.

Section 17 - Refund Of Taxes

TTA - SEC. 17/Int.

Interpretation (Revised: 2009/03)

Section 17 requires the director to refund taxes or security paid where there was no legal obligation to do so. Section 17 came into effect on June 29, 1988 (see SSTA/Sec. 82). Before this amendment, authority for refunding tobacco tax came from the Financial Administration Act.

Effective May 1, 2008, Bill 11, Small Business and Revenue Statutes Amendment Act, 2008, amends Section 17 to remove the reference to mistake of law.

Section 18 - Claim For Refund

TTA - SEC. 18/Int

References: Section 43

Interpretation (Revised: 2016/01)

On June 12, 1990, Bill 39, Taxation Statutes Amendment Act, 1990, amended Section 18 of the Act to require most refund claims to be signed by the claimant (the sole exception is a claim made under Section 43(2)(b)). If the claimant is a corporation, the refund application must be signed by a director or authorized employee of that corporation.

Effective June 5, 1992, Bill 31, Finance and Corporate Relations Statutes Amendment Act, 1992, amended Section 18 to clarify that the provisions of Section 18 apply to refund claims as noted.

Effective March 25, 2015, Bill 13, Finance Statutes Amendment Act, 2015 repeals and replaces section 18. The amendment requires an applicant for a refund to submit to the director, an application in the form and manner satisfactory to the director and to submit information or documents required by the director.

The amendment will allow the director not to pay a refund if the refund application is not made in the form and manner specified by the director or the applicant does not submit the required information.

Section 19 - Refund Limits

TTA - SEC. 19/Int

References: Section 16, Section 43

Interpretation (Revised: 2016/01)

The Act provides that a refund of less than $10 will not be made. Effective May 1, 2008, Bill 11, Small Business and Revenue Statutes Amendment Act, 2008, amends the limitation period for claims from six to four years and removes the reference to mistake of law.

Effective June 29, 1988, the Act was amended to establish a minimum refund amount of $10.

Effective June 9, 2015, Bill 13, Finance Statutes Amendment Act, 2015 amended section 19(1) by specifying that a person may not claim a refund under section 16(5) [Deduction for bad debts] more than 4 years after the date the person writes off the amount as unrealizable or uncollectable.

The addition of a specific limitation period for a person claiming a bad debt refund provides clarity for the person claiming the refund as well as government in administering the refund.

The previous time limit of 4 years after an amount was "paid" was more difficult to interpret for the purpose of a bad debt write-off.

Section 20 - Refund Of Tax Paid By Mistake Of Law

TTA - SEC. 20/Int. - R.3

Interpretation (Revised: 2009/03)

Effective May 1, 2008, Bill 11, Small Business and Revenue Statutes Amendment Act, 2008, repeals Section 20. The remainder of this Interpretation provides historical information.

A mistake of law occurs when both the taxpayer and the Ministry believe there is a legal obligation to pay tax and there is no such obligation. Tax paid under such a shared mistake is tax paid by mistake of law. Mistakes of law are usually revealed by court decisions, which clarify interpretation of the Act.

Before 1986

The Act authorized refunds of all tax paid in error, whether by mistake of law or mistake of fact, provided the claim was made within three years from the date tax was paid.

April 1, 1986 to June 5, 1992

In 1986, a policy decision was made to bar refunds of tax paid under a mistake of law, but to continue to refund taxes paid under a mistake of fact. At the same time, the limitation period for applying for a refund was increased from three years to six years to correspond to the six year limitation on assessments of tax liabilities.

This decision was made because refunding taxes paid under a mistake of law left the province vulnerable to large revenue losses after each adverse court decision

In 1986, the common law did not allow an action for damages for tax by mistake of law.

A 1989 Supreme Court decision strongly indicated the common law would allow for such an action. This left the province vulnerable to revenue losses from adverse court decisions.

Effective June 5, 1992, Section 20 was added to bar common law actions for recovery of sums paid as tax under mistake of law and to provide an alternative statutory remedy. This section paralleled Section 82 of the Social Service Tax Act, which was added in 1990.

A person who had paid money as tax by mistake of law could apply to the director for a refund. The limitation period for an individual in respect of tobacco for the individual's personal consumption was four years. The limitation in all other cases (such as cases involving corporations) was six months.

"Mixed mistakes" that is mistakes of fact and law, were treated as mistakes of law. This was established by Bill 69, Taxation Statutes Amendment Act, 1992.

R.1 Limitation Periods For Claiming Refunds Under a Mistake of Law (2009/03)

This ruling pertained to Section 20, now repealed. Section 20 addressed a mistake of law. It was repealed by Bill 11, Small Business and Revenue Statutes Amendment Act, 2008, effective May 1, 2008.

R.2 Refunds Restricted to Limitation Provisions Under the Statutes (2009/03)

This ruling pertained to Section 20, now repealed. Section 20 addressed a mistake of law. It was repealed by Bill 11, Small Business and Revenue Statutes Amendment Act, 2008, effective May 1, 2008.

R.3 Calculating Interest on Refund Claims Under a Mistake of Law (2009/03)

This ruling pertained to Section 20, now repealed. Section 20 addressed a mistake of law. It was repealed by Bill 11, Small Business and Revenue Statutes Amendment Act, 2008, effective May 1, 2008.

Section 21 - Inspection And Audit

TTA - SEC. 21/Int.

Interpretation (Revised: 2016/01)

Effective June 30, 1992, Bill 69, Taxation Statutes Amendment Act, 1992, amended provisions for inspections and audits in the Act. The existing section was repealed and replaced with Section 21.

Section 22 - Assessments And Penalties

TTA - SEC. 22/Int. - R.2

References:

Act: Section 10, Section 12.3, Section 16, Section 21, Section 32.1, Section 32.2

Interpretation (Revised: 2016/01)

Effective March 26, 1997, Bill 2, Budget Measures Implementation Act, 1997, added subsection 22(2.1), which requires the director to make an assessment for overpaid refunds. Under this amendment, persons who have received a tax refund in excess of the amount due must be assessed for the excess amount, plus interest. This applies only to refunds made on or after March 26, 1997. If the refund overpayment was made before March 26, 1997, no assessment can be made for the overpayment, even if the assessment is made on or after March 26, 1997.

Effective July 28, 1997, Bill 36, Tobacco Tax Amendment Act, 1997, amended subsection 22(5) to establish that the director must assess penalties for tax not collected and remitted on sales of tobacco if the non-payment of the tax is discovered through sources other than a provincial audit or inspection. This amendment requires the director to act upon information received from the Royal Canadian Mounted Police or from federal and provincial jurisdictions with which the province has information sharing agreements. These sources of information are critical in combating tobacco smuggling activities.

Effective July 29, 1999, Bill 71, Finance and Corporate Relations Statutes Amendment Act, 1999, amends section 22 by adding subsection (9) to clarify that a seller who has paid a penalty to the province for failure to collect tax on a sale may sue the purchaser for recovery of an amount equal to the penalty imposed. Subsection (9) also clarifies that the seller may retain amounts recovered through the courts as compensation for the penalty paid to the province on account of the purchaser's tax liability. The amendment provides authority for a seller, who has paid a penalty equal to a purchaser's tax liability to retain any amounts recovered through the courts even though the amount recovered pertains to tax payable by the purchaser to the province.

Effective April 1, 2000, Bill 3, Budget Measures Implementation Act, 2000, amends Sections 22(2), Section 22(2.1), Section 22(2.2), Section 22(5), and Section 22(5.1) to establish that the interest imposed on a tax liability under the Act is to be calculated in a prescribed manner.

Historically, the Consumer Taxation Branch applied simple interest to audit assessments. However, this was inconsistent with Revenue Division policy to apply compound interest to all outstanding tax liabilities due to the province, as well as to outstanding refunds owed to taxpayers. The branch has been calculating interest on a compound basis on all audits begun on or after October 1, 1999.

This amendment provides authority for prescribing the manner in which the interest is to be calculated. OIC # 266/2000 adds TTAR section 34 (formerly Section 26) to prescribe the method of calculating interest (see TTA/Reg. 34/Int.).

Effective March 25, 2015, Bill 10, Budget Measures Implementation Act, 2015 amended subsection 22(2.1) by striking out "received a refund of tax under this Act" and replacing it with "received a refund of an amount under this Act". This amendment ensures there is sufficient legal authority to assess, not only for an excess refund of tax, but also for an excess refund of security.

Effective March 25, 2015, Bill 13, Finance Statutes Amendment Act, 2015 makes several amendments to section 22. Section 22(1) is amended by replacing "the official acting under that section" and substituting "the director." The need in section 22(1) to refer to an official acting under section 21 is no longer because of the new general delegation authority provided under section 12.3.

A new section 22(2.02) is added and requires the director to make an assessment against a person who deducted under section 16(3) of the Act an amount in excess of the amount the person was entitled to deduct.

A new section 22(5.3) is added and requires the director to assess a person who purchases tobacco or an interest in a business through a bulk transaction without obtaining a copy of the certificate provided by the director that states that all amounts owing by the dealer in respect of the dealer's business have been paid.

A new section 22(5.4) is added and requires the director to assess a person who distributes the proceeds from the realization of property contrary to section 32.2 without obtaining from the director a certificate that states that the amount that constituted a lien under section 32.1 of the Act has been paid.

New sections 22(2.3) and section 22(5.2) are also added. These provisions prevent both the section 22(1) assessment and the section 22(2.2) or section 22(5.1) applying to the same transgression.

R.1 Assessments of Wholesalers (Revised: 2009/03)

On the basis of an inspection, audit or examination under Section 21, the director may assess a wholesaler for tax (Section 22(1)), an excess refund plus penalty and interest (Section 22(2.1)), tax plus interest (Section 22(5)), or security plus

R.2 Taxable Transactions Missed During an Audit (Issued: 2004/02)

If a particular taxable transaction was missed in an audit, this does not have any impact on subsequent audits.

Section 22.1 - Assessments Against Board Member

TTA - SEC. 22.1/Int.

References: Section 22; Section 28.1

Interpretation (Issued: 2016/01)

Effective May 13, 2004, Bill 34, Provincial Revenue Statutes Amendments Act, 2004 added section 22.1. The section provides the director with authority to assess a board member for an amount assessed against a corporation under section 22 if the director decides that the board member is jointly and severally liable for an amount under section 28.1.

Effective March 25, 2015, Bill 13, Finance Statutes Amendment Act, 2015 amends section 22.1 to clarify that the director may assess a board member under the section for interest on penalties. The intention is for the amount to include any penalties as well as interest on the tax or security and on any penalties imposed.

Section 22.2 - Notice Of Assessment

TTA - SEC. 22.2/Int.

References: Section 22; Section 22.1; Section 35

Interpretation (Issued: 2016/01)

Effective March 25, 2015, Bill 13, Finance Statutes Amendment Act, 2015 adds section 22.2. The section requires the director to issue a notice of assessment when the director has made an assessment of an amount against a person or imposed a penalty on a person.

The section also authorizes the director to issue a notice of assessment to the custodian or trustee in bankruptcy of a person in relation to whom the director has made an assessment or has imposed a penalty.

Section 23 - Right Of Appeal

TTA - SEC. 23/Int.

Interpretation (Revised: 2016/01)

Section 23 provides a person with a right of appeal regarding an assessment, a denied refund, a director's refusal to issue a dealer's permit, a director's suspension or cancellation or a dealer's permit, a director's decision to refuse to grant an exemption under Section 11(2), a limit imposed by the director under Section 8, a director's decision taken under Section 28.2(2) or a seizure made under Section 51.

The appellant or appellant's agent must appeal in writing to the minister within 90 days of the notice or decision.

On receiving a notice of appeal, the minister must consider the matter, affirm, amend or change the previous action, and promptly notify the appellant of the result.

Effective June 22, 1992, Bill 69, Taxation Statutes Amendment Act, 1992 , added subsection 23(1)(c) which establishes that a person who has been refused a dealer's permit by the director, or whose permit or authorization has been suspended or cancelled by the director, may appeal the director's decision to the minister.

Effective June 30, 1992, Bill 69, Taxation Statutes Amendment Act, 1992, added subsection 23(5) which amended the procedures the minister will follow when an appeal is made to cover appeals under the new subsection 23(1)(c).

Effective March 23, 1994, Bill 19, Taxation Statutes Amendment Act, 1994, amended subsection 23(1) to establish that a decision of the director to disallow a refund claim for tax remitted on a sale written off as a bad debt may be appealed to the minister.

Subsection 23(1) was also amended to extend the time in which a decision of the director may be appealed to the minister from 60 days to 90 days. This amendment also clarified that the appeal period begins on the date of the notice of liability, assessment, penalty, or decision of the director. The 90 day period applies to appeals received on or after March 23, 1994.

Effective August 18, 1995, BC Reg 352/95 brought into force subsection 23(1)(g) of the Act, which was added by Bill 55, Miscellaneous Statutes Amendment Act (No.3), 1994. This amendment established that a limit set by the director on the quantity of exempt tobacco that a dealer may purchase for resale (under Section 8) may be appealed to the minister.

Effective June 30, 1995, Bill 33, Finance and Corporate Relations Statutes Amendment Act, 1995, repealed subsection 23(1)(c) and replaced it with subsection 23(1)(c) and Section 23(1)(d). Subsection 23(1)(c) provides for an appeal of a decision of the director to refuse to issue a dealer's permit. Subsection 23(1)(d) provides that a person may appeal a decision of the director to suspend or cancel a dealer's permit, or to suspend or cancel a permit for a specific location. These changes were necessary to accommodate amendments to Section 7 dealing with the cancellation and suspension of permits only at locations where infractions have occurred.

Effective June 30, 1995, Bill 33, Finance and Corporate Relations Statutes Amendment Act, 1995, added subsection 23(2) and amended subsection 23(5)(a). These subsections provide a right of appeal of a seizure to the minister within 90 days of the seizure. On receipt of the appeal, the minister is required to determine whether the person from whom the tobacco was seized was entitled to possess the tobacco. These changes are consequential to the addition of section 51, which provides for seizures by officials.

Effective July 29, 1999, Bill 71, Finance and Corporate Relations Statutes Amendment Act, 1999, amended the existing appeal provisions to establish that the minister may make changes to interest charges included in an assessment under appeal, or may change the nature of an assessment under appeal.

The previous provisions simply allowed the minister to affirm or amend an assessment or disallowed refund. There was no explicit authority for the minister to reduce or cancel interest charges where the minister considered such charges excessive or unwarranted. Similarly, the previous provisions did not allow for changing the nature of an assessment based on information provided on appeal, for example, from a penalty for failure to collect tax to a penalty for failure to remit tax. Previously, where the evidence provided during an appeal indicated an error in the basis for the assessment, the assessment had to be cancelled and a new notice issued. The Appellant then had to initiate a new appeal of the second assessment, which from the Appellant's perspective, was the same issue. This was frustrating and time consuming for both the Appellant and government.

Under Section 23, a person who disputes a tax assessment or a decision of the director has the statutory right to appeal that assessment or decision to the minister. If the minister set aside or reduced the assessment or decision as a result of the appeal, Section 26(2) authorized the minister to refund any amounts due to the taxpayer. Because it was not practical to have the minister issue refunds, such refunds were issued by the director through the usual divisional refund process. Accordingly, effective March 31, 1999, Bill 52, Taxation Statutes Amendment Act, 1999, amended Section 26(2) to authorize the director, rather than the minister, to make such refunds. This amendment simply provides legislative authority for the more efficient administrative process which is to have such refunds issued by the director.

Effective April 1, 2000, Bill 3, Budget Measures Implementation Act, 2000, amends subsection 23(1)(f) to provide tobacco retail dealers with the right to appeal to the minister the director's disallowance of a claim for a refund of security paid on tobacco that was not, or will not be, sold to a consumer in British Columbia.

Tobacco wholesalers pay a security to the province and are reimbursed this payment by charging a security to the retailer. Retailers are reimbursed from the tax collected on the retail sale. The Act authorizes the director to refund a security payment to a wholesaler or retailer if the tobacco will not be sold in the province. While the previous provisions provided wholesalers with the right to appeal a disallowed refund claim to the minister, the same right was not extended to retailers. The amendment corrects this.

Effective March 25, 2015, Bill 13, Finance Statutes Amendment Act, 2015 amends section 23.

The amendment provides that the following decisions of the director may be appealed to the minister:

  • a decision to refuse to issue a dealer's permit to a person who fails to deposit a bond under section 37 of the Act within the time specified by the director;
  • a decision to suspend or cancel the dealer's permit or retail authorization of a person who has refused or neglected to comply with a requirement of the director to deposit a bond under section 37 of the Act.

Section 24 - Appeal To Court

TTA - SEC. 24/Int.

Interpretation (Revised: 2009/03)

Under Section 24 of the Tobacco Tax Act, a decision of the minister may be appealed to the Supreme Court of British Columbia.

Effective March 23, 1994, under Bill 19, Taxation Statutes Amendment Act, 1994, the time period within which a person may appeal a decision of the minister to the Supreme Court of British Columbia was extended from 60 days to 90 days after the date of the minister's notification of decision. The 90-day appeal period applies to appeals received on or after March 23, 1994.

Effective July 29, 1999, Bill 71, Finance and Corporate Relations Statutes Amendment Act, 1999, amends Section 24 to clarify that either the taxpayer or the government may raise new issues and submit new evidence in an appeal to the court. An appeal to the court is a new hearing.

Section 26 - Collection Of Taxes Unaffected By Pending Appeals

TTA - SEC. 26(2)/Int.

References:

Act: Section 1 "director"; Section 23

Bulletin GEN 002

Interpretation (Issued: 2000/03; Revised: 2016/01)

Effective March 25, 2015, Bill 10, Budget Measures Implementation Act, 2015 amended subsection 26(1) by repealing and replacing paragraphs (a) and (b). The amendment clarifies that the provision applies to any amount assessed or imposed under the Act, including security.

Effective March 25, 2015, Bill 13, Finance Statutes Amendment Act, 2015 amended section 26. The amendment requires an appellant to pay the additional amount owing, and interest on that amount, if the amount of an estimate or assessment or an amount imposed is increased on appeal.

The amendment will allow the government to receive amounts owing when an amount under appeal is increased.

Previously, the government was required to refund an amount when decreased under appeal but there was no requirement for an appellant to pay government when the amount under the appeal was increased.

Under section 23 [right of appeal], a person who disputes a tax assessment or a decision of the director has the statutory right to appeal that assessment or decision to the minister. If the minister set aside or reduced the assessment or decision as a result of the appeal, section 26(2) authorized the minister to refund any amounts due to the taxpayer. Because it was not practical to have the minister issue refunds, such refunds were issued by the director through the usual divisional refund process. Accordingly, effective March 31, 1999, Bill 52, Taxation Statutes Amendment Act, 1999, amends section 26(2) to authorize the director, rather than the minister, to make such refunds. This amendment simply provides legislative authority for the more efficient administrative process which is to have such refunds issued by the director.

Section 28 – Liability For Amounts Collected

TTA - SEC. 28/Int.

Interpretation (Issued: 2000/07, Revised: 2016/01)

If a person collects tax or an amount as if it were tax, then the person is deemed to hold the amount in trust for the government. Until the amount is paid to the government, it forms a lien and charge on the entire assets of the person. The lien or charge has priority over all other claims of any person.

Consequential to the addition of Section 2(12) and effective April 1, 2000, Bill 3, Budget Measures Implementation Act, 2000, amends Section 28 to extend the same treatment to amounts collected in error under the Act.

Effective June 9, 2015, Bill 13, Finance Statutes Amendment Act, 2015 repeals subsection (2). The amendment is required because new lien provisions have been added under section 32.1.

Section 28.1 - Board Member's Liability

TTA - SEC. 28.1/Int.

Reference: Section 31

Interpretation (Issued: 2016/01)

Effective May 13, 2004, Bill 34, Provincial Revenue Statutes Amendment Act, 2004 added section 28.1. The section provides that a board member is joint and severally liable for an amount equal to the taxes that a corporation has failed to collect or remit

Effective March 25, 2015, Bill 13, Finance Statutes Amendment Act, 2015 amends section 28.1. The amendment clarifies that the joint and several liability of a board member under the section includes liability for interest on penalties.

It also updates cross references to provisions in the Bankruptcy and Insolvency Act (Canada) and the Companies' Creditors Arrangement Act (Canada).

Section 28.3 - Liability Of Other Persons

TTA - SEC. 28.3/Int.

Interpretation (Issued: 2016/01)

Effective March 25, 2015, Bill 13, Finance Statutes Amendment Act, 2015 adds section 28.3. The provision provides that if more than one person is subject to the same tax, or is required to pay the same security to the government, each person is jointly and severally liable for the tax or for payment of the security.

Section 29 – Notice To Taxpayer Before Taking Proceedings

TTA - SEC. 29/Int.

Interpretation (Issued: 2000/07, Revised: 2009/03)

The director must provide notice to a person owing money under the Act before taking proceedings for recovery. Failure to provide notice does not affect the validity of proceedings. The notice requirement was amended effective April 1, 2000, by Bill 3, Budget Measures Implementation Act, 2000.

Section 30 - Court Proceeding To Recover Amount Owing

TTA - SEC. 30/Int.

Interpretation (Issued: 2016/01)

Effective March 25, 2015, Bill 13, Finance Statutes Amendment Act, 2015 repealed and replaced section 30. The provision authorizes the government to commence a proceeding in a court of competent jurisdiction to recover an amount owing (not just taxes owing).

Section 31 - Summary Proceedings

TTA - SEC. 31/Int.

Interpretation (Issued: 2016/01)

Effective March 25, 2015, Bill 13, Finance Statutes Amendment Act, 2015 repealed and replaced section 31. The provision clarifies that all proceedings may be taken on a certificate issued and by the director as if it were a judgment of the court in favour of the government.

The amendment provides that the director may issue and file a new certificate if the amount specified in the certificate that has been issued and filed is different from the actual amount owing.

Treating the certificate as if it were a judgement of the court extends the limitation period for the recovery of the amounts in the certificate from 2 years to 10 years; the government will have a greater ability to recover amounts owing.

The amendment improves the administration of the certificates because the director will be able to seek the correct amount owing from a taxpayer rather than an amount that is in error.

Section 32 - Attachment

TTA - SEC. 32/Int.

Interpretation (Issued: 2000/03, Revised: 2016/01)

If the director knows or suspects a person owes or will soon owe a debt to a taxpayer, or is or will soon be liable to make a payment to a taxpayer, and the taxpayer owes tax, then the director may demand the person pay the government instead of the taxpayer. This is known as attachment. Section 32 sets out the procedure for attachment.

Effective March 31, 1999, Bill 52, Taxation Statutes Amendment Act, 1999, amends the Act to allow demands by fax or other electronic means, and to require payment on receipt of the demand or as soon as the funds become available.

Section 32(2), section 32(3), section 32(3.1), section 32(6)(b), and section 32(7) amend the provisions to authorize serving a demand by fax or other electronic means. The previous provisions required that a demand be served either in person, which is impractical, or by registered mail, which may take several days to be delivered. Priority in payment of demands received against a particular debtor can be significantly affected by delays of only hours. As the overall use of electronic services increases, the province's inability to serve demands electronically could significantly reduce the effectiveness of third party demands as a revenue recovery tool.

Section 32(7.1) requires that a third party demand be paid on receipt of the demand or as soon as the third party is required to make a payment to the debtor. Under the previous provisions, the demand remained in place for 90 days from the date of issue. By policy, some banks and financial institutions waited until the end of the 90-day period to pay the debt. If demands from other creditors were received within that time, the debt would be shared among the creditors, reducing the province's ability to recover the full amount of the liability. The amendment to require immediate payment brings British Columbia's third party demand practices in line with those of other provinces and the federal government.

Effective March 25, 2015, Bill 13, Finance Statutes Amendment Act, 2015 repealed section 32(12) and section 32(13) (which provide rules regarding service of demands under the section) as a consequence to the addition of section 12.2 which adds new service of notice provisions.

Section 32.1 - Lien

TTA - SEC. 32.1/Int.

Interpretation (Issued: 2016/01; Revised: 2017/05)

Effective May 19, 2016, Bill 14, Finance Statutes Amendment Act, 2016 modified the definition of "associated corporation" in subsection 32.1(1) to make reference to associated corporations within the meaning of section 256 of the Income Tax Act (Canada). This change will help determine whether two corporations are associated in a situation where the director has not gone through the process of requesting documentation under subsection 32.1(15).

Effective June 9, 2015, Bill 13, Finance Statutes Amendment Act, 2015 added section 32.1. Prior to the addition of section 32.2, the Ministry relied on a statutory lien under section 28 as a remedy to collect taxes and interest owing to government.

The addition of section 32.1 provides for the establishment of a lien in relation to amounts owing under the Act, consistent with other taxation Acts.

The amendment allows the director to impose a lien on real property or personal property rather than a statutory lien.

A lien on real property or personal property is preferred to statutory liens. A lien on real property or personal property may be registered in the Land Titles or Personal Property Security Registry.

Registered liens are more easily enforceable than a lien imposed by statute.

Section 32.2 - Responsibility Of Person Having Control Of Property

TTA - SEC. 32.1/Int.

Interpretation (Issued: 2016/01)

Effective March 25, 2015, Bill 13, Finance Statutes Amendment Act, 2015 adds section 32.2. The new section requires a person who takes control or possession of the property of a person who has collected tax or is required to collect or remit tax or pay security to obtain a certificate from the director indicating that those amounts have been paid. If the certificate is not obtained, the person who distributes the property is liable for the amount owing to government.

The provision also establishes when an amount owing by a person who distributes the proceeds from the realization of property without obtaining the required certificate from the director must be paid.

Section 33 - Injunction

TTA - SEC. 33/Int.

Interpretation (Revised: 2009/03)

Section 33 permits the minister to apply to the Supreme Court of British Columbia for an injunction to prevent unauthorized persons from selling tobacco.

Section 34 - Alternative Remedies

TTA - SEC.34/Int.

References:

Bulletin GEN 001

Interpretation (Issued: 2016/01)

Effective March 25, 2015, Bill 10, Budget Measures Implementation Act, 2015 repealed and replaced section 34 to clarify that the alternative remedy provisions apply to any amount owing under the Act and not only taxes.

Section 35 - Penalty And Interest

TTA - SEC. 35/Int

Reference:

Act: Section 1 "director"; Section 28

TTAR: Section 34

Bulletin CTB 005

Interpretation (Issued: 2016/01)

Effective March 31, 1989, the Act was amended to clarify that a penalty imposed for the non-collection of tax includes both an amount equal to the tax that should have been collected and interest, and that such charges form part of a lien provided for in the Act.

Effective April 1, 2000, Bill 3, Budget Measures Implementation Act, 2000 amends subsection 35(2) to establish that the interest imposed on a tax liability under Section 35 is to be calculated in a prescribed manner.

Historically, the Ministry applied simple interest to audit assessments. However, this was inconsistent with Revenue Division policy to apply compound interest to all outstanding tax liabilities, as well as to outstanding refunds owed to taxpayers. The Ministry has been calculating interest on a compound basis on all audits begun on or after October 1, 1999.

This amendment ensures clear statutory authority for prescribing the manner in which the interest is to be calculated. OIC # 266/2000 adds Regulation 34 (formerly Regulation 26) to prescribe the method of calculating interest (see TTA/Reg. 34/Int.).

Effective February 18, 2015, Bill 10, Budget Measures Implementation Act, 2015 amended section 35 by repealing and replacing subsections (1) and (2). This amendment ensures that penalties may be imposed, not only for failing to pay and remit tax, but also for failing to pay security as required. This amendment also clarifies that interest may be assessed on all amounts owing under the Act.

Effective June 9, 2015, Bill 13, Finance Statutes Amendment Act, 2015 repeals subsection (3) consequential to the addition of section 32.1. The new lien provision under section 32.1 will have the same effect. Accordingly, subsection (3) is no longer needed.

Section 36 - Limitation Period

TTA - SEC. 36/Int.

LIMITATION PERIOD

Interpretation (Issued: 2004/12, Revised: 2009/03)

Effective February 18, 1998, Bill 6, Taxation Statutes Amendment Act, 2004, establishes a seven year limitation period for undertaking collection action. The limitation period begins from the date of an assessment or reassessment.

Under the Tobacco Tax Act proceedings for willful default or fraud may be commenced at any time.

Section 37 - Bond Deposit

TTA - SEC. 37/Int.

Interpretation (Issued: 2000/12, Revised: 2016/01)

Effective April 1, 2000, Bill 3, Budget Measures Implementation Act, 2000, amends the bond deposit provisions of the Act:

Subsection 37(1) - The amendment expands the director's authority to request a dealers post a bond. Before amendment, the director could request a bond only if the dealer had failed to collect or remit tax. The amendment removes the restriction.

Tobacco wholesalers can remit as much as several million dollars in tax each month. If a dealer enters bankruptcy, considerable tax revenue is placed at risk. The previous legislation did not provide the director with any recourse to protect revenue where there was an indication that a business may be in financial difficulty. Requiring that the dealer post a surety bond under such circumstances reduces the revenue risk for the province.

Subsection 37(2) - This subsection was not amended in 2000. It provides that the bond must be determined by the director, but must not be greater than an amount equal to six times the tax, or the estimated tax, that would normally be collected by the dealer each month under the Act.

Subsection 37(2.1) -- If a bond is required as a condition of holding a dealer's permit or a retail authorization, the amount of the bond must be the greater of the amount established under subsection 37(2) or $5,000.

Subsection 37(3) - This amendment expands the bonding provisions to allow the director to apply a bond against an unpaid security (see TTA/Sec. 11/Security/Int. for information on security payment system) as well as to interest on that amount.

Subsection 37(4) -This provision allows the director to request an additional bond in response to changing circumstances of the dealer's business. This provision is required to protect revenue where a dealer's business has increased considerably, and the bond retained by the director is no longer sufficient to protect provincial revenues in the event that the dealer fails to collect or remit tax, or enters bankruptcy.

Effective March 25, 2015, Bill 13, Finance Statutes Amendment Act, 2015 repeals and replaces section 37. The amendment provides the following:

  • Allows the director to require a person who has applied to be a dealer or a person who has applied for a specified certificate to provide a bond.
  • Allows the director to vary the required amount of the bond to an amount not greater than the maximum amount provided for in the section.
  • Allows the director to return a bond, or pay an amount equal to the amount remaining on a bond, to the person who deposited the bond.
  • expands the abilities of the director to fairly and efficiently administer bonding requirements. For example, previously the director did not have legislative authority to return a bond when the provider ceased operations.
  • clarifies the amount on which the maximum amount of a bond is determined.

Section 39 - Offences

TTA - SEC. 39/Int. - R.1

References:

Act: Section 5; Section 13; Section 27; Section 39; Section 40 Section 49; Section 58

TTAR: Section 30

Interpretation (Revised: 2016/01)

Section 39 creates offences and punishments. Offences include:

  • Contravening Section 5 (Selling tobacco without a permit), see subsection 39(4)(a);
  • Contravening Section 13 (Breach of confidentiality), see subsection 39(5);
  • Contravening Section 27 (Consumer liable for tax), see subsection 39(1);
  • Contravening Section 49 (Requirement to give assistance to peace officers), see subsection 39(1);
  • Contravening subsection 58(1) - (3) (Sale of unmarked tobacco), Section 58(4);
  • Contravening Section 58(7) (Marking tobacco without written authorization of the director), see Section 39(7);
  • (Transportation of tobacco in bulk) or Section 58(5) (Sale of marked tobacco for resale outside the province), see Section 39(1);
  • Failure of dealer to collect tax, see Section 39(2);
  • Failure of retail dealer to collect tax or file prescribed reports, see Section 39(2);
  • Making or acquiesces in the making of a false or deceptive statement in a return, certificate or form required to be made or filed under the Act, see Section 39(4)(b)
  • Disposing of a record of a dealer to avoid paying tax, see Section 39(4)(c);
  • Hindering an inspection under the Act, see Section 39(4)(d.1);
  • Willfully failing to comply with the Act or regulations, see Section 39(4)(e); and,
  • Possessing or keeping tobacco unlawfully or for an unlawful purpose, see Section 39(7).

Effective June 30, 1992, Bill 69, Taxation Statutes Amendment Act, 1992, amended the Act to provide a number of new offence provisions.

Effective July 30, 1993, Bill 46, Tobacco Tax Amendment Act, 1993, amended the Act to provide a number of new offence provisions. These provisions are a necessary part of the tobacco marking system established by BC Reg. 177/93 which came into force on May 28, 1993.

Effective July 8, 1994, Bill 55, Miscellaneous Statutes Amendment Act (No.3), 1994, decreased the threshold amount in the provision from 150 cartons to 50 cartons and increased the potential penalty to three times the tax applicable to the tobacco.

Effective June 30, 1995, Bill 33 Finance and Corporate Relations Statutes Amendment Act, 1995, amended Section 39(1) and added section 39(9).

Effective April 1, 2000, Bill 3, Budget Measures Implementation Act, 2000, amends the Act to parallel the amendments being made to the other consumption tax statutes that are aimed at rationalizing the offence and prosecution provisions of the Act.

Under the previous provisions, any infraction, regardless of how minor or unintentional, was deemed to be a prosecutable offence and subject to court imposed fines and terms of imprisonment. The province did not prosecute for minor and unintentional infractions of the legislation. Including these minor offences provided little guidance to assist the court in determining the seriousness of an offence. The courts were therefore hesitant to impose the higher penalties for serious infractions. The amendment addresses this problem by removing from the offence provisions under Section 39(1), references to unintentional infractions. Such infractions will continue to be subject to administrative compliance measures, such as assessment of tax liabilities. Consequently, Section 39(4), which lists offences for wilful failure to comply with the Act or to avoid tax, is amended to include refusal to cooperate with an audit or inspection under the Act.

These amendments clarify for taxpayers and the courts which infractions are considered by the province to be sufficiently serious as to warrant court action.

Effective February 18, 2015, Bill 10, Budget Measures Implementation Act, 2015 amended section 39 by amending subsections (2), (4), (5), (10), and (11) by replacing references to tax with references to tax and security or amounts to be paid under the Act. This amendment ensures that offences apply to failure to pay security as well as failure to pay or collect tax as required under the Act.

Effective March 25, 2015, Bill 13, Finance Statutes Amendment Act, 2015 adds section 39(12.1). The amendment clarifies that a penalty under the section is in addition to any other penalty under the Act.

R.1 Unlawfully Possessing/Keeping Tobacco (Revised: 2009/03)

Under the Act and Regulations:

  • A person other than a dealer possessing or keeping more than 1000 grams (5 cartons) of tobacco is presumed to have the tobacco for an unlawful purpose, see Section 40(3);
  • A person liable to pay tax under the Act must not possess or keep unmarked tobacco in quantities in excess of 1000 grams (5 cartons), see Section 58(3);
  • A dealer must not possess or store packages, cartons or cases that bear the mark of another jurisdiction, unless (a) the dealer intends to ship the packages for resale out of the province, or (b) the dealer has written authorization from the director, see Regulation 30(1); and,
  • A dealer must not store black stock, unmarked tobacco, or tobacco bearing the mark of another jurisdiction, at other than a mark point or place authorized by a director, see Regulation 30(2).

Section 40 - Prosecutions

TTA - SEC. 40/Int. - R.1

References:

Act: Section 1 "director", "dealer", "dealer's permit"; Section 39; Section 43.2; Section 47, Section 48

Interpretation (Revised: 2016/01)

Effective July 1, 2015, Bill 13, Finance Statutes Amendment Act, 2015 adds section 40(5). The amendment adds a mechanism for proving, in a prosecution, that an agreement under the new section 43.2 of the Act has been entered into.

Effective March 25, 2015, Bill 10, Budget Measures Implementation Act, 2015 repealed and replaced subsection 40(1), expanding the subsection from including only failure to pay tax or to collect or forward tax to including failure to collect, remit or pay an amount under the Act. This amendment ensures that the provision applies to security as well as tax.

Effective April 1, 2000, Bill 3, Budget Measures Implementation Act, 2000, amends the Act by replacing the reference to 5 cartons in subsections 40(3) with its equivalent in grams - 1000 grams. Subsection 40(3) previously established that if a person, other than a dealer, was found to be in possession of more than 5 cartons of cigarettes, then the person to unlawfully possess the tobacco or to possess it for an unlawful purpose, unless there was evidence to the contrary. This amendment ensures the same provision applies when a person possesses an equivalent amount of loose or other tobacco products.

In addition, subsection 40(4) was established, which provides if any person, including a dealer, is found to be in possession of more than 1000 grams of tobacco that does not bear the province's prescribed mark or stamp, then it is evidence that the tobacco is possessed for an unlawful purpose or is unlawfully possessed, unless there is evidence to the contrary.

Effective June 30, 1995, Bill 33, Finance and Corporate Relations Statutes Amendment Act, 1995, amended subsection 40(3). The amendment clarified that dealers are not subject to the 1000 gram limit.

Effective July 30, 1993, Bill 46, Tobacco Tax Amendment Act, 1993, added subsection 40(3), establishing that in a prosecution for unlawfully possessing tobacco or possessing tobacco for an unlawful purpose, possession of more than 1000 gram of tobacco (five cartons of cigarettes) is, in the absence of evidence to the contrary, prima facie evidence of unlawful possession or possession for an unlawful purpose. The presumption is rebuttable (see R. 1).

Effective June 30, 1992, Bill 69, Taxation Statutes Amendment Act, 1992, moved to subsection 40(2) the provision that in a prosecution against a dealer, the person's application form is evidence that the person is a dealer, and the person's completed tax return is evidence that the person collected the tax.

R.1 Possession of More Than 1000 Grams (Revised: 2009/03)

Subsection 40(3) provides that possession of more than 1000 grams of tobacco by a person other than a dealer is prima facie evidence that the person unlawfully possesses or keeps tobacco for an unlawful purpose.

Due to the short shelf life of tobacco, it is unlikely that an individual would keep more than this amount for their own consumption.

Further possession of more than 1000 grams is only prima facie evidence of unlawful possession. If there is contrary evidence that the tobacco is for personal consumption, then there is no unlawful possession. An example of lawful possession would be if six people were going on an extended fishing trip and one of the people bought 1200 grams (or six cartons of cigarettes) from a legitimate retail dealer.

Section 43 - Collection Of Tax By Canada Post Or Canada Customs

TTA - SEC. 43/Int.

References:

Act: Section 14, Section 17, Section 18, Section 28, Section 29, Section 30, Section 31, Section 32.1

Interpretation (Revised: 2016/01)

Effective October 1, 1992, federal customs officers began collecting British Columbia tobacco tax (and liquor mark-ups) at international border crossings. Bill 73, Revenue Statutes Amendment Act, 1992, amended the Tobacco Tax Act to provide for the payment of tax to customs officers as agents for the provincial government. The tax does not apply to tobacco that an individual may import duty-free.

Effective July 30, 1993, Bill 46, Tobacco Tax Amendment Act, 1993, provided authority for the collection of provincial tobacco tax by federal postal agents on tobacco mailed into the province from outside of the province, once the province and the federal government enter an agreement for such collection. To date, no such agreement has been signed and federal postal agents do not collect provincial tobacco tax.

Section 43 provides the following:

Subsection 43(1) authorizes the minister to enter into agreements with the federal government respecting the collection of tobacco tax by customs agents and postal agents.

Subsection 43(2)(b) provides that under an agreement referred to in section 43(1), the federal government may be authorized to refund amounts collected by a customs agent or a postal agent, if the refund requirements of the Act are met.

Subsection 43(2)(c) provides that under an agreement referred to section 43(1), the federal government may be authorized to enter into an agreement with Canada Post respecting the administration and enforcement of the Tobacco Tax Act by postal agents.

Subsection 43(3) and section 43(4) provide that when customs officers or postal agents collect tax under an agreement referred to in section 43(1), they are acting as agents for the Provincial Crown and that no action or proceeding may be commenced against them for anything done in good faith while carrying out a duty or power under the Act.

Subsection 43(5) provides that section (4) does not absolve the government from vicarious liability because of an act or omission for which the government would have been liable had that subsection not been in force.

Effective June 9, 2015, Bill 13, Finance Statutes Amendment Act, 2015 amends section 43(3). Section 43 (3) provides the provisions of the Act that do not apply to customs officers or postal agents as agents for the government under the Act. The amendment adds section 32.1 to prevent the lien provisions from applying to customs officers or postal agents when they act as agents for the government.

Section 43.1 - Band Tax Agreement

TTA - SEC. 43.1/Int.

Interpretation (Revised: 2009/03)

In 1997, the federal government introduced legislation that enables the Cowichan Tribes and the Westbank Band to impose a band tobacco tax on sales of tobacco to First Nations purchasers. This legislation was the result of extensive consultations involving representatives from the bands, the federal government, and the province. The Cowichan Tribes passed a bylaw imposing a provincial style tax on sales of tobacco on its reserves, effective November 1, 1997. The band tax rate equals the provincial tobacco tax rate. The province agreed to act as the Tribes' agent in the collection of the band tax, using the mechanisms in place for collection of the provincial tax. Westbank is not pursuing a provincial-type tax at this time.

Effective July 28, 1997, Bill 36, Tobacco Tax Amendment Act, 1997, established Section 43.1, which authorizes the minister to enter into an agreement with a band under which the province may collect a band tax on the band's behalf and distribute the money collected to the band.

Section 43.1(1) defines "band tobacco tax" as a tax imposed by a band by-law on First Nations purchasers who, under the provisions of Section 87 of the Indian Act (Canada), are exempt from provincial tobacco tax, as tax of on personal property situated on a reserve.

Section 43.1(2) authorizes the minister to enter into an agreement with a band to collect the band tax on behalf of the band.

Section 43.1(3) designates the director to administer a tax collection agreement between the band and the minister.

Section 43.1(4) establishes that the band tax collected is to be deposited into the consolidated revenue fund. This provision facilitates collecting the band tax using existing mechanisms for collecting the provincial tax.

Section 43.1(5) establishes that the band tax collected must be paid to the band out of the consolidated revenue fund, and that the amount paid to the band may be based on an estimate of the tax collected.

Section 43.2 - Minister May Enter Into Agreements

TTA - SEC. 43.2/Int.

References:

Regulations: Section 23, Section 23.1, Section 25, Section 26, Section 29, Section 30

Interpretation (Issued: 2016/01)

Effective July 1, 2015, Bill 13, Finance Statutes Amendment Act, 2015 added section 43.2. This new provision adds specific authority for the Minister of Finance, on behalf of the British Columbia government, to enter into an agreement with the federal government respecting the administration of a tobacco marking system.

Section 44 - Power To Make Regulations

TTA - SEC. 44/Int.

References: Section 11; Section 12

Interpretation (Revised: 2016/01)

Section 442(b) provides the Lieutenant Governor in Council may make regulations regarding the collection and remittance of the tax and of any payment of a security and any other conditions or requirements affecting the collection and remittance of tax.

Effective July 30, 1993, Bill 80, Miscellaneous Statutes Amendment Act (No.2), 1993, added subsection 2(b).

Effective June 30, 1995, Bill 33, Finance and Corporate Relations Statutes Amendment Act, 1995, amended section 44(2)(b) consequential to the establishment of a system of security payments under Section 11 and Section 12. The amendment authorizes the making of regulations prescribing the methods, conditions, or requirements for collecting and remitting security payments for different classes of persons.

Effective March 31, 2010, Bill 2, Budget Measures Implementation Act, 2010, adds paragraph (i.5) to subsection 44(2). Paragraph (i.5) authorizes the Lieutenant Governor in Council to make regulations regarding an annual fee for holders of retail authorizations.

Effective March 25, 2015, Bill 13, Finance Statutes Amendment Act, 2015 amended section 44(2) by adding section 44(2)(k.2), replacing section 44(2)(n) and adding section 44(2)(o.1). Amends paragraph 44 (2) (n) of the Act, consequential to the amendment to section 51 and addition of 12.3 of the Act by this Bill. The amendment provides for regulations respecting fees for certificates that may be issued by the director under sections 10 and 32.2 of the Act, as enacted by this Bill. The amendments to paragraphs 44 (2) (k.2) and (o.1) establish the rules and powers of the director in administering refund applications and charging fee for issuing specific certificates.

The need to specify that the Lieutenant Governor in Council may make regulations regarding an official authorized by the director to seize tobacco is no longer required due to the general delegation authority provided under Section 12.3 of the Tobacco Tax Act as proposed in this Bill.

Effective July 1, 2015, Bill 13, Finance Statutes Amendment Act, 2015 amended section 44(2) by repealing and replacing section 44(2)(e), section 44(2)(k), adding a new section 44(2)(k.1) and adding a reference to section 43.2 in section 44(2)(l). Section 44(2)(e) clarifies the authority to define "words" (in addition to "expressions") by regulation. Section 44(2)(k) clarifies the authority to establish a tobacco marking system by regulation that includes different marks or stamps for different types of tobacco (e.g., cigarettes, loose tobacco) or packages (i.e., packages, cartons, cases). Section 44(2)(l) authorizes regulations respecting an agreement under section 43.2.

TTA - SEC. 44(2)(F)/R.1 - R.3

44(2)(f) Exemption For Certain Tobaccos, Dealers, Or Purchasers

References: BC Reg 26/86; Bulletin GEN 007

Interpretation (Issued: 2009/03)

The Lieutenant Governor in Council may exempt from the application of all or part of the Act or Regulations, certain tobaccos, dealers or purchasers.

The Consumer Tax Exemption Regulation, B.C. Reg. 26/86 exempts the following persons in their capacity as consumers from the application of the Tobacco Tax Act, provided they are not Canadian Citizens or landed immigrants:

(a) diplomatic agents of a diplomatic mission situated in Canada who are citizens of the country operating the diplomatic mission;

(b) senior officials of United Nations' agencies situated in Canada who have been accorded diplomatic privileges by the Department of External Affairs of the government of Canada;

(c) career consular officers of a consular post situated in British Columbia, or of a consular post situated elsewhere in Canada but accredited in British Columbia, who are citizens of the country operating the consular post;

(d) administrative and support staff of consular posts situated in British Columbia who are citizens of the country operating the consular post; and

(e) spouses of the persons referred to in paragraphs (a), (b), (c) and (d).

R.1 Historical Treatment of Members of the Diplomatic and Consular Corps (Revised: 2009/03)

Before April 1, 1986, members of the diplomatic and consular corps were eligible for a refund of tax paid on purchases of tobacco products for their exclusive use.

Effective April 1, 1986, the refund provision was replaced with a point-of-sale exemption. Persons eligible for exemption are:

  • career consular officers of a post situated in British Columbia, or with authority in British Columbia, who are citizens of the country operating the consular post;
  • diplomatic agents of a diplomatic mission situated in Canada who are citizens of the country operating the diplomatic mission;
  • United Nations officials who have been accorded diplomatic privileges by External Affairs Canada under the Diplomatic and Consular Privileges and Immunities Act (Canada) provided they are not landed immigrants or Canadian citizens;
  • members of the administrative and support staff of a consular post situated in British Columbia who are citizens of the country operating the consular post; and,
  • the spouses of persons referred to in the above paragraphs provided they are not Canadian citizens or landed immigrants.

Eligibility for exemption is determined at the time the diplomatic or consular identity card is issued by External Affairs, Canada. The diplomatic and consular corps identity cards of persons who qualify for a point-of-sale exemption in British Columbia will have authorization for such exemption on the back of the identity card.

Tobacco products which are not obtained through Canada Customs are not eligible for the point-of-sale exemption.

R.2 Different Types of Tobacco, Dealers, or Purchasers (Revised: 2009/03)

Effective July 8, 1994, subsection 44(2)(f) was amended by Bill 55, Miscellaneous Statutes Amendment Act (No.3), 1994. This amendment clarified that the Lieutenant Governor in Council may make regulations exempting certain types of tobacco, dealers, or purchasers from parts of the Act or regulations. The previous wording of this section indicated that the authority was limited to providing exemption from the whole of the Act or regulations.

This amendment permits the establishment of an exemption for tobacco that is legitimately purchased from duty-free stores by individuals entering the province from international borders. The amendment was required because such tobacco does not bear the province's tax-paid mark. Under the tobacco marking program, only persons entitled to an exemption may be in possession of unmarked tobacco.

R.3 Members of the Commonwealth of Learning Agency (Revised: 2009/03)

Reference: Financial Administration Act, Section 19

Effective December 2, 1988, specific individuals who are members of the Commonwealth of Learning Agency are eligible for an exemption from tax due under the Tobacco Tax Act.

Persons eligible for this exemption are:

  • the Commonwealth of Learning Agency;
  • the President of the Commonwealth of Learning Agency;
  • the Vice-President of the Commonwealth of Learning Agency;
  • the spouses of the President and the Vice-President; and,
  • the children under the age of 19 years of the President and Vice-President.

This exemption does not apply to any individual who is a Canadian citizen or permanent resident of Canada.

The President of Commonwealth of Learning Agency has also been issued a green diplomatic identity card by the federal government. This entitles that individual to obtain an exemption from tobacco tax in the same manner as other diplomats.

In addition, the Assistant Vice-President of the Commonwealth of Learning Agency is eligible for an exemption from tax on tobacco products which are purchased directly from a manufacturer.

TTA - SEC. 44(2)(G)/Int.

44(2)(g) Limits On Purchases For Resale

Interpretation (Revised: 2009/03)

Effective August 18, 1995, B.C. Reg. 352/95 brought into force subsection 44(2)(g), which was added by Bill 55, Miscellaneous Statutes Amendment Act (No.3), 1994. Subsection 44(2)(g) provides authority for the Lieutenant Governor in Council to make regulations it considers necessary and advisable regarding Section 8 (Limits on tobacco purchased for resale). Section 8 was enacted by the same Bill and Regulation.

TTA - SEC. 44(2)(H)/Int.

44(2)(h) Classes Of Dealer Permits

Interpretation (Revised: 2009/03)

Effective June 22, 1992, Bill 69, Taxation Statutes Amendment Act, 1992, added subsection 44(2)(h), which authorizes the Lieutenant Governor in Council to make regulations prescribing classes of dealer's permits and different requirements for each class of dealer.

TTA - SEC. 44(2)(I)/Int.

44(2)(i) Classes Of Dealers

Reference: Section 7

Interpretation (Revised: 2009/03)

Effective June 22, 1992, Bill 69, Taxation Statutes Amendment Act, 1992, added subsection 44(2)(i) to establish that regulations may be made to authorize classes of persons to sell tobacco products at retail. This amendment was required to bring tobacco retailers within the permit system.

TTA - SEC. 44(2)(I.1)/Int.

44(2)(i.1) Authorization To Sell Tobacco

Interpretation (Issued: 2009/05)

Effective February 18, 2004, Bill 6, Taxation Statutes Amendment Act, 2004, adds Section 44(2)(i.1) which authorizes the Lieutenant Governor in Council to make regulations prescribing circumstances in which the director may issue an authorization to sell tobacco at retail, and establishing limits or conditions on this authorization.

TTA - SEC. 44(2)(I.3)/Int.

44(2)(i.3) Cancellation Of Dealer's Permit

Interpretation (Issued: 2009/05)

Effective May 1, 2008, Bill 11, Small Business and Revenue Statutes Amendment Act, 2008, adds Section 44(2)(i.3) which authorizes the Lieutenant Governor in Council to make regulations prescribing the circumstances in which the director must cancel a person's dealer's permit, including the power to establish different circumstances for different permits or persons or classes of permits or persons.

TTA - SEC. 44(2)(I.4)/Int.

44(2)(i.4) Cancellation Of Dealer's Permit Or Retail Authorization

Interpretation (Issued: 2009/05)

Effective May 1, 2008, Bill 11, Small Business and Revenue Statutes Amendment Act, 2008, adds Section 44(2)(i.4) which authorizes the Lieutenant Governor in Council to make regulations prescribing the circumstances in which the director may cancel a person's dealer's permit or a person's retail authorization, including the power to establish different circumstances for different permits, authorizations or persons or classes of permits, authorizations or persons.

TTA - SEC. 44(2)(I.2)/Int.

44(2)(i.2) Providing Information

Interpretation (Issued: 2009/05)

Effective September 7, 2007, Section 44(2)(i.2) came in force by BC Reg. 232/2007 which was added by Bill 12, Tobacco Sales (Preventing Youth Access To Tobacco) Amendment Act, 2006. The subsection authorizes the Lieutenant Governor in Council to make regulations prescribing the information respecting the sale of tobacco at retail that a person must provide to the director, and the time and manner for providing that information.

TTA - SEC. 44(2)(J)/Int.

44(2)(j) Limit On Retail Sale

Interpretation (Revised: 2009/03)

Effective July 8, 1994, Bill 55, Miscellaneous Statutes Amendment Act (No.3), 1994, added subsection 44(2)(j), which authorizes the Lieutenant Governor in Council to make regulations limiting the quantity of tobacco that may be sold or purchased at a single retail sale or at retail sales during a specified period.

Effective April 1, 2000, Bill 3, Budget Measures Implementation Act, 2000, expanded subsection 44(2)(j) to authorize setting different sale/purchase limits for different circumstances, different types of tobacco or different dealers, consumers, or classes of dealers or consumers.

TTA - SEC. 44(2)(K)/Int.

44(2)(k) Tobacco Marking

Reference: Regulation 23

Interpretation (Revised: 2009/03)

Paragraph 44(2)(k) enables the Lieutenant Governor in Council to create a tobacco marking system. The regulations for this system are contained in Part 3 of the Tobacco Tax Act Regulations. The rest of this entry provides information on the statutory history of this system.

Effective March 31, 1989, the Act was amended to provide for a system for marking tobacco products to prove that tax under the Act has been accounted for.

A marking system may be established by regulation at any time it is deemed appropriate by the minister

Effective June 22, 1992, Bill 69, Taxation Statutes Amendment Act 1992, repealed the section that authorized the making of regulations for tobacco marking and replaced it with subsection 44(2)(k).

Subsection 44(2)(k) clarified the existing power to make regulations for a tobacco marking system by including the power to make regulations prohibiting possession, purchase and sales of tobacco except in accordance with the marking system.

Effective May 28, 1993, the province introduced a tobacco marking system under B.C. Reg. 177/93. The marking system is provided in the regulations referenced above and explained in the TIM/TTA/Reg. entries for those regulations.

Effective April 1, 2000, Bill 3, Budget Measures Implementation Act, 2000, amended Section 44(2)(k) to authorize making regulations to establish a separate marking system for exempt tobacco purchased through the legitimate wholesale-retail chain.

TTA - SEC. 44(2)(M)/Int.

44(2)(m) Interest Rates On Money Held As Security

Reference: Section 54(15)

Interpretation (Revised: 2009/03)

Effective July 30, 1993, Bill 46, Tobacco Tax Amendment Act, 1993, added subsection 44(2)(m) to authorize the Lieutenant Governor in Council to prescribe a rate of interest for the purposes of subsection 54(15) of the Act. Subsection 54(15) requires the province to pay interest on money held in lieu of seized tobacco and on money paid to a person for seized tobacco that has been lost or destroyed.

TTA - SEC. 44(2)(N)/Int.

44(2)(n) Seizure By Official

References: Section 51(2); Regulation 33

Interpretation (Revised: 2009/03)

Effective June 30, 1995, Bill 33, Finance and Corporate Relations Statutes Amendment Act, 1995, added subsection 44(2)(n). The paragraph enables the Lieutenant Governor in Council to prescribe the amount of tobacco that may be seized by an official under subsection 51(2). Regulation 33 (formerly Regulation 24.2, added by B.C. Reg. 233/96) prescribes the maximum quantity an official may seize as 10 000 grams of tobacco.

TTA - SEC. 44(2)(O)/Int.

44(2)(o) Calculating Interest

Reference: Regulation 34

Interpretation (Issued: 2000/09, Revised: 2009/03)

Effective April 1, 2000, Bill 3, Budget Measures Implementation Act, 2000, adds subsection 44(2)(o). This subsection authorizes prescribing interest rates and the method for calculating interest under the Act. OIC # 266/2000 added Regulation 34 to (formerly Regulation 26), which prescribes how interest is to be calculated (see TTA/Reg. 34/Int.).

TTA - SEC. 44(2)(P)/Int.

44(2)(p) Prescribing Classes Or Persons

References: Sections 40(4), 51(2) and 54(8)(a)

Interpretation (Issued: 2000/07, Revised: 2009/03)

Effective April 1, 2000, Bill 3, Budget Measures Implementation Act, 2000, introduced paragraph 44(2)(p). The paragraph empowers the Lieutenant Governor in Council to prescribe circumstances in which certain sections of the Act do not apply to prescribed classes of persons. The sections of the Act are Section 40(4) (presumption that keeping more than 1000 grams of tobacco is keeping tobacco for an unlawful purpose), Section 51(2) (seizure of tobacco on inspection) and Section 54(8)(a) (judicial order that tobacco is forfeited to the government). As of 2009/03, no regulations have been made under this paragraph.

Section 44.2 - Refunds Authorized Or Required Under Regulations

TTA - SEC.44.2/Int.

References:

Act: Section 1 "director", "retail dealer"; Section 44

TTAR: Section 15

Interpretation (Issued: 2016/01)

Effective March 25, 2015, Bill 10, Budget Measures Implementation Act, 2015 added section 44.2 to ensure there is sufficient authority for the director to provide a refund to a retail dealer in the event of a tobacco tax rate decrease. TTAR section 15 [tax rate change and payment of security] sets out the specific refund requirements.

Section 45 - Proceeds Of Forfeited Tobacco

TTA - SEC. 45/Int.

Reference: Section 54(4)

Interpretation (Revised: 2009/03)

Effective July 30, 1993, Bill 46, Tobacco Tax Amendment Act, 1993, added Section 45, which provides proceeds from tobacco tax and any forfeiture under Section 54(4)(a) (tobacco seized because it was kept for an unlawful purpose) must be paid into the consolidated revenue fund.

Section 47 - Right To Search For Tobacco

TTA - SEC. 47/Int.

Reference: Section 54(4)

Interpretation (Revised: 2009/03)

A peace officer may, without a warrant, search any place or premises, other than a residence, or may stop and search any vehicle, vessel or aircraft, provided:

  • It is impracticable to obtain a warrant; and,
  • The peace officer has reasonable grounds to believe that either the place or conveyance contains:
    • Tobacco that is unlawfully possessed or kept or for an unlawful purpose; or
    • Records or any other thing that will provide evidence related to such tobacco.

Effective July 30, 1993, Section 47 was added under Bill 46, Tobacco Tax Amendment Act, 1993. This section provides that a peace officer who has reasonable and probable grounds to believe that tobacco is unlawfully possessed or kept in a vehicle, vessel, aircraft, or any other place or premises that is not a residence, may search that place without a warrant.

Effective June 30, 1995, Bill 33, Finance and Corporate Relations Statutes Amendment Act, 1995, amended this section to clarify that a peace officer may conduct a search for unlawfully held tobacco without a warrant only in situations where it would be impractical to obtain a warrant.

Effective April 1, 2000, Bill 3, Budget Measures Implementation Act, 2000, expands the provision enabling peace officers to conduct warrantless searches to records or other things that will provide evidence related to unlawful tobacco activities. The previous provision limited warrantless searches to searches for tobacco, which restricted the ability of the police to obtain sufficient evidence in support of laying charges against persons involved in black market activities.

Section 48 - Search Warrants

TTA - SEC. 48/Int.

References: Sections 47, 54

Interpretation (Revised: 2009/03)

Effective July 30, 1993, Section 48 was added under Bill 46, Tobacco Tax Amendment Act, 1993. This section authorizes a justice, in certain circumstances, to issue a warrant to a peace officer to search any premises, including a residence, or any vehicle, vessel or aircraft for tobacco unlawfully possessed or possessed for an unlawful purpose, and to seize such tobacco.

Effective April 1, 2000, Bill 3, Budget Measures Implementation Act, 2000, amends the existing provision to allow police to search and seize not only tobacco and packaging, but also records or other evidence that will support charging persons with an offence under the Act.

Section 49 - Requirement To Give Assistance And Information

TTA - SEC. 49/Int.

References: Sections 47, 48

Interpretation (Revised: 2009/03)

Effective July 30, 1993, Section 49 was added under Bill 46, Tobacco Tax Amendment Act, 1993. Subsection 49(1) requires that a person in charge of a vehicle, vessel, aircraft, place, premises, or residence that is being searched under the provisions of the Act must give all reasonable assistance in connection with the stoppage, entry or search.

Subsection 49(1.1) establishes a person must not hinder, molest or interfere with a peace officer doing anything that the peace officer is authorized to do under the Act, or prevent or attempt to prevent a peace officer from doing anything that the peace officer is authorized to do under the Act.

Subsection 49(2) establishes that refusal or failure to stop a vehicle, vessel, or aircraft when required to stop by a peace officer, or obstructing or refusing entry to a peace officer conducting a search, commits an offence.

Effective April 1, 2000, Bill 3, Budget Measures Implementation Act, 2000, amended Section 49 by replacing the previous provision, which established an offence for failure to cooperate with a search, with a provision that imposes an obligation to provide reasonable assistance, and to not hinder or otherwise obstruct a search. As with the previous provision, failure to meet this obligation is an offence under the Act.

Section 50 - Seizure Of Tobacco

TTA - SEC. 50/Int.

References: Sections 47, 48

Interpretation (Revised: 2009/03)

Effective July 30, 1993, Section 50 was added under Bill 46, Tobacco Tax Amendment Act, 1993. Subsection 50(1) authorizes a peace officer who is conducting a search under Section 47 or Section 48 of the Act to seize tobacco unlawfully possessed, the tobacco packages, and other records, documents or things that provide evidence of an offence against the Act or regulations.

Subsection 50(2) requires that a peace officer who seizes tobacco or other things under subsection 50(1) of the Act, to provide a receipt for items to the person from whom they were seized. This subsection also requires that seized items other than tobacco be returned on completion of an investigation or proceeding.

Subsection 50(3) provides the Crown and other persons acting under the authority of the Act are not liable for loss or damage arising from the deterioration or destruction of things lawfully seized. This section is necessary to protect the provincial Crown from liability for deterioration of lawfully seized tobacco, which has a short shelf-life.

Section 51 - Seizure By Official

TTA - SEC. 51/Int.

References:

Act: Section 21

Regulation: Section 33

Interpretation (Revised: 2016/01)

Section 51 empowers a person appointed as an inspector or auditor under Section 21 (an "official") and who finds tobacco during an inspection, audit or examination under Section 21, to seize the tobacco in certain circumstances.

Officials were granted this power of seizure effective June 30, 1995, when Bill 33, Finance and Corporate Relations Statutes Amendment Act, 1995, came into force. The purpose of Bill 33 was to alleviate demands on police by granting officials limited seizure powers.

Before June 30, 1995, only peace officers had the power to seize tobacco. However, RCMP and other law enforcement agencies did not always have sufficient resources to seize unmarked and other illicit tobacco.

The branch established a voluntary forfeiture program in February 1995. Retailers in possession of 20 cartons or less of illegal tobacco could voluntarily forfeit it to branch staff. Retailers who agreed would sign a "voluntary forfeiture" form and surrender the tobacco. The form acted as a receipt for the tobacco as well as a record of the infraction. If the retailer refused, police were asked by branch staff to seize the tobacco.

Voluntary forfeiture was only offered on a first infraction and only when small amounts of tobacco were discovered. On subsequent infractions or where more than 20 cartons of illegal tobacco were discovered, police were called to seize the tobacco.

Effective June 30, 1995, Bill 33, Finance and Corporate Relations Statutes Amendment Act, 1995, added Section 51 giving branch officials authority to seize small amounts of tobacco.

Effective April 1, 2000, Bill 3, Budget Measures Implementation Act, 2000, amends the Act by replacing the reference in subsection 51(3) to 5 cartons of cigarettes with its gram weight equivalent - 1000 grams.

The conversion from cartons to grams ensures that an equivalent amount of loose tobacco or other tobacco products is also subject to seizure.

Effective February 16, 2005, Bill 8, Taxation Statutes Amendment Act, 2005, expands the seizure authority provided to officials by Section 51(2)(b) to include the seizure and removal of tobacco products that are held for sale where the tobacco was not purchased from an authorized wholesaler.

This authority allows officials to seize stolen tobacco products that are sold illegally through licensed retailers.

Bill 8 also amended Section 51(3) to deem that tobacco products not purchased from an authorized wholesaler are considered to be for retail sale if the amount held by a person exceeds 1000 grams.

Effective September 1, 2007, BC Reg. 232/2007 brings into force Section 51(2)(b)(vi) which was added by Bill 12, Tobacco Sales (Preventing Youth Access To Tobacco) Amendment Act, 2006. The subsection empowers an official who finds tobacco while conducting an inspection, audit or examination under Section 21 to seize and remove tobacco if the tobacco is held for retail sale in the province by a person at a location contrary to a suspension or cancellation under the Act.

Effective March 25, 2015, Bill 13, Finance Statutes Amendment Act, 2015 makes several amendments to section 51 as a consequence of the addition of section 12.3 .

The need to specify that an official authorized by the director may seize tobacco and remove that tobacco is no longer required due to the general delegation authority provided under Section 12.3.

Effective July 1, 2015, Bill 13, Finance Statutes Amendment Act, 2015 amends section 51(2) as a consequence to the introduction of British Columbia's adoption of the federal tobacco stamping system.

Section 51(2)(b)(i) was updated for purposes of consistency in the Act and regulations. The phrase "prescribed mark or stamp" replaces the phrase "mark or stamp specified in the regulations";

Section 51(2)(ii) was updated to ensure that tobacco may be seized if it bears a mark or stamp that is not British Columbia's prescribed mark or stamp.

Section 51(2)(iii) was to updated for purposes of consistency in the Act and regulations. The phrase "was marked by a person" replaces the phrase "was marked or stamped by a person". Under British Columbia's tobacco marking program, tobacco intended for taxable sales in the Province will be "marked" by a person with the prescribed mark or stamp. Tobacco will no longer be "stamped".

Section 53 - Detention Of Evidence

TTA - SEC. 53/Int.

References: Sections 52, 54

Interpretation (Revised: 2009/03)

Section 53 governs the detention of goods obtained under Section 52 (Order for detention of things seized).

Subsection 53(1) provides that items seized under Section 52, other than a thing that may be subject to forfeiture under Section 54 (tobacco), must not be detained for more than 1 year from the date of seizure. The exceptions to this rule are if, before expiration of the 1 year period, any one of the following occurs: proceedings have commenced in respect of the thing(s) seized; the owner agrees to continued detention; or a justice orders continued detention.

Subsection 53(2) empowers a justice to extend detention of anything seized under Section 52 more than once.

Subsection 53(3) empowers the director to copy detained records.

Subsection 53(4) requires the things detained to be returned to the person entitled to them without delay on completion of all proceedings for which the things were required.

Effective July 30, 1993, Section 53 was added under Bill 46, Tobacco Tax Amendment Act, 1993.

Effective April 1, 2000, Bill 3, Budget Measures Implementation Act, 2000, amends the Act to extend the time in which the police may detain evidence seized under Section 52 of the Act.

The previous provisions under subsections 53(1) and 53(2) required that a court order be obtained to retain seized tobacco or other things for more than three months if charges had not been laid against the person from whom the item(s) was seized. The three-month requirement was insufficient for peace officers who may require considerably more time to gather the necessary evidence to proceed with prosecution. It was also an inefficient use of police and court resources. The amendment addresses this problem by allowing evidence to be retained for up to one year. Extending retention beyond one year will require approval of a justice.

Section 54 - Detention And Forfeiture

TTA - SEC. 54/Int.

References:

Act: Section 39; Section 50; Section 52; Section 55

Regulation: Section 34

Interpretation (Revised: 2016/01)

Section 54 governs the treatment of seized tobacco, including its return, sale, treatment of proceeds from its sale, and forfeiture. Section 54 was added to the Act by Bill 46, Tobacco Tax Amendment Act, 1993, (effective July 30, 1993) and amended by the Finance and Corporate Relations Statutes Amendment Act, 1995, (effective June 30, 1995).

Effective July 1, 2015, Bill 13, Finance Statutes Amendment Act, 2015 amends section 54 as a consequence to British Columbia's adoption of the federal tobacco stamping system.

Section 54(8)(a)(i) was updated for purposes of consistency in the Act and regulations. The phrase "prescribed mark or stamp" replaces the phrase "mark or stamp specified in the regulations";

Section 54(8)(ii) was updated to ensure that tobacco may be seized if it bears a mark or stamp that is not British Columbia's prescribed mark or stamp.

Section 54(8)(iii) was to updated for purposes of consistency in the Act and regulations. The phrase "was marked by a person" replaces the phrase "was marked or stamped by a person". Under British Columbia's tobacco marking program, tobacco intended for taxable sales in the Province will be "marked" by a person with the prescribed mark or stamp. Tobacco will no longer be "stamped".

Section 55 - Third Party Interest

TTA - SEC. 55/Int.

References: Section 51, 54

Interpretation (Revised: 2009/03)

Effective July 30, 1993, Section 55 was added to the Act by Bill 46, Tobacco Tax Amendment Act, 1993. Subsection 55(1) provides that a person who has an interest in tobacco seized from another person, and who is not charged with an offence regarding the tobacco, may, within 30 days of the seizure, apply to the court for an order declaring that person's interest in the tobacco and/or requiring the tobacco be returned to that person.

This provision is necessary to protect the interests of persons with an interest in tobacco seized from another person and who are innocent of wrongdoing. For example, the victim of a tobacco theft may apply to the court for return of the tobacco.

Subsection 55(2) establishes the conditions under which an applicant may obtain a court order. The applicant is entitled to an order where the court is satisfied that the applicant is innocent of any complicity in the offence or collusion with the offender. The court must also be satisfied that the applicant took all reasonable care in respect of any person permitted to obtain possession of the tobacco and to satisfy the applicant that such possession was not contrary to the Act or Regulations.

Section 56 - Report Of Seizures

TTA - SEC. 56/Int.

Reference: Section 51

Interpretation (Revised: 2009/03)

Effective July 30, 1993, Section 56 was added to the Act by Bill 46, Tobacco Tax Amendment Act, 1993, to require a peace officer who seizes tobacco to report the details of the seizure to the director as soon as practical but no later than 10 days after the seizure.

Section 57 - Absence Of Mark Or Stamp Is Notice

TTA - SEC. 57/Int.

References: Section 39; Regulations 26, 27

Interpretation (Revised: 2009/03)

Effective July 30, 1993, Bill 46, Tobacco Tax Amendment Act, 1993, added Section 57 to the Act. Section 57 provides that the absence of a prescribed mark or stamp is notice that the tax on the tobacco under the Act has not been accounted for. Therefore, persons who unlawfully purchase or possess unmarked tobacco cannot claim they were unaware that tax on the tobacco had not been accounted for.

Section 58 - Prohibitions

TTA - SEC. 58/Int.

References:

Act: Section 39; Section 57

Regulation: Section 26; Section 27

Interpretation (Revised: 2016/01)

Effective July 30, 1993, Section 58 was added under Bill 46, Tobacco Tax Amendment Act, 1993.

Bill 33, Finance and Corporate Relations Statutes Amendment Act, 1993, amended subsection 58(4) to clarify that the reference to a "dealer" in this section meant a dealer who holds a permit or an authorization under the Act. This section was made retroactive to April 1, 1989, to correspond to the six year statutory limitation for refunds and assessments.

Effective June 30, 1995, Bill 33, Finance and Corporate Relations Statutes Amendment Act, 1995, added subsections 58(5), (6), and (7). Subsections 58(5) and (6) prohibit the sale or distribution of tobacco or any packages, cartons or cases, bearing a prescribed mark or stamp if the seller or distributor knows or ought to know the transferee is a person who sells or offers to sell tobacco outside the province. The prohibition does not apply to a person who holds a dealers permit.

Subsection 58(7) prohibits a person from marking or stamping tobacco without the prior written authorization of the director.

Contravention of this provision is an offence under the Act. Under subsection 39(9), such an offence is subject to a fine of up to $50,000 or to a term of imprisonment of up to 2 years, or to both a fine and imprisonment.

Effective April 1, 2000, Bill 3, Budget Measures Implementation Act, 2000, amends the Act by replacing the reference to 5 cartons of cigarettes in subsection 58(3), with its equivalent in grams - 1000 grams.

Subsection 58(3) previously established that where a person is liable to pay tax under the Act, they are prohibited from possessing more than 5 cartons of unmarked tobacco. By changing the reference to 1,000 grams, this amendment ensures that the same provision under subsection 58(3) applies where a person possesses either cigarettes or an equivalent amount of loose tobacco or other tobacco products.

Effective March 30, 2006, Bill 14, Small Business and Revenue Statutes Amendment Act, 2006 amends subsection 58(4) and adds subsection 58(4.1) to clarify that only a dealer who is authorized, and a person who is in the business of transporting goods for the public and is under contract with a dealer for the movement of tobacco, may transport tobacco in bulk quantities.

Effective July 1, 2015, Bill 13, Finance Statutes Amendment Act, 2015 amends section 58 as a consequence to British Columbia's adoption of the federal tobacco stamping system. In both section 58 (5) and section 58(7), under British Columbia's tobacco marking system tobacco will be "marked" by a person with the prescribed mark or stamp. Tobacco will no longer be "stamped". Accordingly, the verbs "stamped" and "stamp" are eliminated from these subsections.

Also, the word "indicium" has been eliminated from the Act and is replaced with the phrase "prescribed mark or stamp". The prescribed stamp will be set out in the regulations.