January 2011

On December 15, 2010, the Sustaining Canada’s Economic Recovery Act (Bill C-47) received Royal Assent. This act contains the legislative amendments to the Excise Act required to reduce the paperwork burden for qualifying brewers under the federal government’s Paperwork Burden Reduction Initiative (PBRI). The measures contained in this Notice come into force on December 15, 2010.

Background

All brewers licensed under the provisions of the Excise Act (Act) are required to file form K50B, Monthly Return – Excise Duty – Beer , each month. The Act provides that returns be filed on or before the tenth working day of the following month. As well, payment due dates are on the last day of the month that follows the month of production.

What are the new provisions?

Effective December 15, 2010, new provisions allow a qualifying brewer to have filing periods that are semi-annual instead of monthly. Payments in respect of beer produced during the six-month period will be due no later than the last day of the month following the period. This new filing period will be authorized by the Canada Revenue Agency (CRA) once an application has been received from the brewer. However, the payment and return due date for a licensed brewer who did not request to have its filing period changed to semi-annual filing, will remain unchanged.

Filing and payment information is currently available in Excise Duty Beer Notice EDBN 14, K50B Filing and Payment Schedules for Brewers (2010 – 2011) which is currently available on the CRA Web site at www.cra-arc.gc.ca/tx/tchncl/xcs-ct-ntcs-eng.html.

What are the conditions?

A licensed brewer may qualify for the new filing period where:

• the brewer has been licensed with the CRA for at least one year;
• the total of all duties imposed, levied and collected on beer and malt liquor brewed by the brewer and any person associated with the brewer did not exceed $120,000 in the previous or current year; and
• the brewer is in compliance with the Act.

Note: For purposes of the Act, the determination of whether two or more licensed brewers are related or associated generally follows the same rules used under the Income Tax Act.

What is the new filing period?

The new filing period of a qualifying brewer is for:

• the period beginning on January 1 and ending on June 30, or the portion of that period, if any, that ends before the month of which a revocation becomes effective; and
• the period beginning on July 1 and ending on December 31, or the portion of that period, if any, that ends before the month on which a revocation becomes effective.

When to file the K50B return and pay excise duty

Under the new provisions, a qualifying brewer will be allowed to file the K50B return on or before the tenth working day of the month following the end of the six-month period. The excise duty imposed in respect of beer produced during the six-month period must be paid no later than the last day of the month following the six-month period.

For example, a brewer who files the K50B return for the period of July 1, 2011 to December 31, 2011, must file that return by January 13, 2012, and must pay any excise duty owed on or before January 31, 2012.

Revocation of the authorization for semi-annual filing

An authorization to have a semi-annual filing period will be revoked

• where the total of all duties imposed, levied and collected on beer and malt liquor brewed by the brewer and any person associated with the brewer exceeds $120,000 in the previous or current year; or
• where the brewer fails to comply with the Act; or
• where the brewer requests in writing that the CRA do so.

The revocation will become effective as of the first day after the end of the six-month period in which the excess occurs. In certain cases, such as when a brewer requests in writing that the CRA revoke the filing period, the revocation will become effective as of the first day after the end of that particular period.

In those circumstances, the CRA will send a notice in writing to the brewer and will specify the month for which the revocation becomes effective.

How to apply for semi-annual filing

At this time the CRA is developing an election form B284, Election or Revocation of an Election for Semi-Annual Reporting to accommodate any future requests for semi-annual filing. In the interim, a qualifying brewer can submit to the CRA a request in writing using company letterhead and indicating:

• the business name and the business number;
• the year-end of the business;
• a description of how the brewer meets the above listed conditions; and
• a listing of all associated companies.

The request should be mailed to the Summerside Tax Centre, Suite 101, 275 Pope Road, Summerside PE C1N 6E7. If you have questions about the status of your request you can call the CRA toll free at 1-877-432-5472 within Canada or 1-902-432-5472 outside Canada.

Additional information

Excise duty circulars dealing specifically with the filing requirements for brewers will be modified to reflect the amendments to the Act. For additional information on this topic, you may contact your nearest regional excise duty office. These offices are listed in Excise Duty Memorandum 1.1.2, Regional Excise Duty Offices , at www.cra-arc.gc.ca/exciseduty.