Excise Duty Memorandum

June 2025

This version replaces the one dated June 2022. This memorandum has been revised to update and consolidate information on the excise duty exemption for 100% Canadian wine made from honey or apples and to supplement existing information on the fortification of wine. It also cancels and replaces Notice EDN75, Repeal of excise duty exemption for 100% Canadian wine, and Notice EDN77, Excise duty exemption for 100% Canadian wine made from honey or apples.

Except as otherwise noted, all statutory references in this memorandum are to the provisions of the Excise Act, 2001. The information in this memorandum does not replace the law found in the Act and its regulations.

If this information does not completely address your situation, refer to the Act or regulations or contact your regional excise office for additional information. The offices are listed at Contact information – Excise and Specialty Tax Directorate.

On this page

• Obtaining and renewing a wine licence
  • Requirement
  • Exceptions to the requirement for a wine licence
• Obtaining other licences
  • Excise warehouse licence
  • User's licence
• Determining the volume and absolute ethyl alcohol content of wine
• Possession and transportation of wine
  • Bulk wine
  • Packaged wine
• Information to be displayed on containers – Labelling
• Fortification of wine
• Excise duty rates
• Imposition of and responsibility for excise duty
  • Bulk wine
    • Exceptions to the imposition of duty on bulk wine
  • Packaged wine
    • Exceptions to the imposition of duty on packaged wine
• Removals for consignment sales by a small wine licensee
• Excise duty exemption for 100% Canadian wine made from honey or apples
• Excise duty exemption for small producers of wine
• Bulk wine taken for analysis or destroyed in an approved manner
• Keeping records
• Returns and payments
  • Reporting periods
  • Branches or divisions filing separate returns
• Claiming refunds
  • Restrictions
• Enforcement
• Explanation of terms used in this memorandum

Obtaining and renewing a wine licence

Requirement

1. Subsection 62(1) prohibits a person from producing or packaging wine unless they have a wine licence. A person must apply for and obtain a wine licence under subsection 14(1) to produce or package wine in Canada.

2. With the licence, a wine licensee is also allowed to possess, transport, import, and export bulk wine (for which they are responsible), as stated in paragraph 70(2)(b), subsection 75(2), and paragraph 76(a).

3. A person is not entitled to a wine licence solely because they are deemed to have packaged wine by marking a special container, as stated in subsection 14(2). Refer to Memorandum EDM4-8-1, Special containers of wine, for more information.

4. Instructions and requirements for obtaining a wine licence are provided in Memorandum EDM2-2-1, Obtaining and renewing a licence.

5. Section 4 of the Regulations Respecting Excise Licences and Registrations states that a wine licence is valid for a maximum period of two years. The licensing letter issued by the CRA will specify the effective date and expiry date of the licence. Under section 9 of the Regulations, a wine licensee must apply to renew their licence at least 30 days before the day on which the licence expires. To do this, the wine licensee must complete and submit Form L63A, Application for an Alcohol Licence or Registration.

Exceptions to the requirement for a wine licence

6. Subsection 62(2) states that the following persons do not require a wine licence:

• an individual who produces wine for their personal use or who packages that wine
• a purchaser who packages wine from a marked special container at an authorized bottle-your-own premises

7. An individual may produce wine at a residence or a ferment-on-premises facility. Refer to Memorandum EDM4-1-3, Ferment-on-premises registrants, for more information.

Obtaining other licences

8. A wine licensee may require other licences, depending on the activities they carry on. For example, a wine licensee may also need an excise warehouse licence to store non-duty-paid packaged wine or a user's licence to fortify wine.

9. For more information on other excise duty licences and the activities that may be performed under those licences, refer to Memorandum EDM2-1-1, Licence types.

Excise warehouse licence

10. Under section 88, a wine licensee cannot possess non-duty-paid packaged wine but an excise warehouse licensee can. To defer the payment of excise duty after packaging wine, the packaged wine must immediately be entered into an excise warehouse, as stated in subsection 135(3). Excise duty does not have to be paid until the packaged wine is removed from the excise warehouse, as per subsection 136(1). Therefore, a wine licensee often has a separate excise warehouse licence to store non-duty-paid packaged wine.

11. For more information on the obligations of excise warehouse licensees, refer to Memorandum EDM8-1-1, Excise warehouses.

User's licence

12. Under section 62.1 and subsection 130(1), a licensed user that is also a wine licensee may use bulk spirits to fortify wine to an alcoholic strength that does not exceed 22.9% absolute ethyl alcohol by volume. To fortify wine, bulk wine must be produced and then transferred to a licensed user for fortification. Therefore, a wine licensee often has a user's licence to fortify their wine.

13. For more information on the obligations of licensed users, refer to Memorandum EDM3-1-2, Licensed users.

Determining the volume and absolute ethyl alcohol content of wine

14. Under subsection 148(1), a wine licensee must determine the volume and absolute ethyl alcohol content of wine in a manner specified by the CRA using approved instruments. The CRA has approved several types of instruments for this purpose, including thermometers, hydrometers, digital density meters, and mass flow measuring systems. However, each individual instrument that a wine licensee uses for excise duty purposes must first be approved by the CRA.

15. To accurately measure the absolute ethyl alcohol content of wine for excise duty purposes, the wine must first be distilled.

16. Information relating to specifications and procedures to follow in determining the volume and absolute ethyl alcohol content is available in Memorandum EDM1-1-5, Instrument approval.

Possession and transportation of wine

Bulk wine

17. The possession of bulk wine is strictly controlled by the Act. Under paragraph 70(2)(b), a wine licensee may possess or transport bulk wine if it was produced or imported by a wine licensee.

18. According to paragraph 70(2)(d), bulk wine produced or imported by a wine licensee may be transported or stored by an alcohol registrant on behalf of the wine licensee. More information on the transportation or storage of bulk wine by alcohol registrants is available in Memorandum EDM3-1-4, Alcohol registrants.

Packaged wine

19. A wine licensee is not permitted to possess non-duty-paid packaged wine. A wine licensee that packages wine on which excise duty is imposed must either pay the excise duty at the time of packaging or enter the non-duty-paid packaged wine into an excise warehouse to defer the payment of excise duty.

20. A wine licensee is permitted to possess wine that is packaged in Canada and relieved of excise duty, as well as duty-paid packaged wine. For example, under paragraph 135(2)(b), wine that is produced by a small producer of wine and packaged by, or on behalf of, the small producer is relieved of excise duty. In this case, the exempt wine is not entered into an excise warehouse and must be recorded separately from duty-deferred wine.

Information to be displayed on containers – Labelling

21. Under section 87, a wine licensee that packages wine must ensure that the wine container (for example, bottles) and any packaging encasing that container display one of the following, as prescribed by the Regulations Respecting the Information to be Displayed on Alcohol Containers and their Packaging:

• their name and address
• their licence number

22. The information may be displayed on the container itself or the container's label and must be displayed immediately after packaging unless the wine is entered into an excise warehouse immediately after packaging, in which case the information must be displayed before the wine is removed from the warehouse.

23. In addition to the information above, marked special containers of wine must indicate that the contents are packaged wine and that the container is intended for delivery to and use at a bottle-your-own premises.

24. For more information on labelling containers of wine, refer to Memorandum EDM4-2-3, Labelling of containers of wine.

Fortification of wine

25. Fortification is conducted for the purpose of increasing the alcoholic strength of a wine. The compositional standard for wine under the Food and Drug Regulations states that wine may have added to it during the course of manufacturing brandy, fruit spirits, or alcohol distilled to not less than 94% absolute ethyl alcohol by volume.

26. For excise duty purposes, this means that wine must first be produced and that fortification of the wine may only be completed by a licensed user (that is also a wine licensee) using brandy, fruit spirits, or spirits containing at least 94% absolute ethyl alcohol by volume. To meet the definition of wine under section 2, the final alcohol strength of the fortified wine cannot exceed 22.9% absolute ethyl alcohol by volume.

27. In general, a person will hold both a wine licence and a user's licence if they intend to fortify wine. They will produce wine under their wine licence, then transfer the wine in bulk to their user's licence to fortify it, and subsequently return the bulk fortified wine to their wine licence to package it.

28. A wine licensee must report the quantities of bulk wine removed for fortification by a licensed user under "Reductions to bulk wine inventory – Removed for delivery to licensed users" on page 3 of Form B265, Excise Duty Return – Wine Licensee. The wine licensee must report the quantities of bulk fortified wine received from the licensed user under "Additions to bulk wine inventory – Wine received from licensed users" on page 3 of Form B265.

29. For more information about fortifying wine and reporting by a licensed user, refer to Memorandum EDM3-1-2.

Excise duty rates

30. Excise duty is imposed on bulk wine taken for use and on wine packaged in Canada. The rates of excise duty on wine are provided at Excise duty rates.

Imposition of and responsibility for excise duty

Bulk wine

31. Under subsections 134(1) and (2), excise duty is imposed on bulk wine that is taken for use unless it is used for analysis or destroyed in an approved manner. It is payable at the time the wine is taken for use by the licensee that is responsible for the bulk wine at that time.

32. According to sections 113 and 115, the person responsible for bulk wine is generally the wine licensee or the licensed user that owns the bulk wine. If a wine licensee or licensed user does not own the bulk wine, then responsibility rests with the licensee that last owned, imported, or produced it.

Exceptions to the imposition of duty on bulk wine

33. As per subsection 134(3), excise duty is not imposed on bulk wine that is taken for use if the wine is either:

• produced by an individual for their personal use and consumed in the course of that use
• produced in Canada from honey or apples and composed wholly of agricultural or plant product grown in Canada

Packaged wine

34. Under subsections 135(1) and (3), excise duty is imposed on wine that is packaged in Canada at the time the wine is packaged. Excise duty is payable at that time by the licensee that was responsible for the bulk wine unless the packaged wine is entered into an excise warehouse immediately after packaging.

35. When a wine licensee enters non-duty-paid packaged wine into an excise warehouse immediately after the wine is packaged, section 140 states that the excise warehouse licensee becomes liable for the duty on the packaged wine.

36. Under subsection 136(1), excise duty is payable on packaged wine that is removed from an excise warehouse for entry into the duty-paid market. It is payable by the excise warehouse licensee at the time of removal of the packaged wine.

Exceptions to the imposition of duty on packaged wine

37. As stated in subsection 135(2), excise duty is not imposed on wine that is either:

• produced in Canada from honey or apples and composed wholly of agricultural or plant product grown in Canada
• produced and packaged by an individual for their personal use
• produced by a small producer of wine and packaged by, or on behalf of, the small producer

38. A wine licensee is not eligible for the relief available to individuals who produce and package wine for their personal use.

39. Under subsection 147(4), excise duty is not payable on samples of non-duty-paid packaged wine provided free of charge to individuals if all of the following conditions are met:

• the wine is removed from the excise warehouse of the wine licensee that produced or packaged the wine
• the wine is consumed at the premises where the licensee produces or packages wine
• the wine is not in a marked special container

Removals for consignment sales by a small wine licensee

40. For the purposes of section 136, a small wine licensee is a wine licensee that did not sell more than 60,000 litres of wine during their previous fiscal year.

41. According to subsection 136(2), a small wine licensee may remove packaged wine from their own excise warehouse without excise duty becoming payable if certain conditions are met. The wine must have been produced or packaged by the small wine licensee and must be delivered to a retail store for sale on a consignment basis. The retail store must not be located on the premises of a wine licensee and must be operated on behalf of two or more small wine licensees. When the wine is sold by the retail store, it is deemed to have been removed from the excise warehouse for entry into the duty-paid market.

Excise duty exemption for 100% Canadian wine made from honey or apples

42. Paragraph 135(2)(a) provides an excise duty exemption for wine that is produced in Canada from honey or apples and composed wholly of agricultural or plant product grown in Canada (for example, certain honey wine, cider, and mead).

43. To qualify for this exemption, the wine must be produced in Canada by fermentation of honey or apples and the honey and apples must have been produced or grown in Canada.

44. If apple juice or concentrate is fermented, the apples used to make the juice or concentrate must have been grown in Canada. The addition of any other fruits or berries, or any juices or concentrates made from other fruits or berries, before or during the fermentation process will disqualify the wine from the exemption.

45. Yeast and sugar (including liquid sugar) used in producing the wine are not required to be made wholly from Canadian grown agricultural or plant product.

46. Sugar is only permitted to be added in the minimum quantity sufficient to aid in the fermentation process. The addition of sugar in greater quantities means that the wine is not produced from honey or apples.

47. In determining whether a wine is eligible for the exemption, the origin of ingredients added to the wine after fermentation is not generally considered. However, any other wine added must also qualify for the exemption, and any spirits added to fortify the wine must have been made in Canada wholly from agricultural or plant products grown in Canada.

48. A wine licensee claiming the excise duty exemption for 100% Canadian wine made from honey or apples must keep adequate records to support their claim. Records must be sufficient to identify the sources of ingredients used to produce the wine. Where records are insufficient to verify that a wine is eligible for the exemption for 100% Canadian wine made from honey or apples, excise duty will be assessed.

49. The inventory of packaged exempt 100% Canadian wine made from honey or apples must be recorded separately from any duty-paid or duty-deferred inventory kept at a licensee's premises. A wine licensee or an excise warehouse licensee may store packaged exempt wine on their premises but must keep separate records for exempt and duty-paid or duty-deferred inventories.

50. A wine licensee must report the packaging of quantities of exempt 100% Canadian wine made from honey or apples on page 3 of Form B265 under "Reductions to bulk wine inventory – Removed to packaging activities: Packaged – exempt". An excise warehouse licensee must not report quantities of packaged exempt wine on their excise duty return because there is no duty to defer.

51. The prior exemption for wine produced in Canada from 100% Canadian agricultural or plant product grown in Canada ended on June 30, 2022. Any wine licensee with wine packaged prior to June 30, 2022, that intends to claim this exemption must record the inventory of qualifying 100% Canadian wine separately from the duty-deferred inventory kept in an excise warehouse and must keep adequate records to support the exemption claim.

Excise duty exemption for small producers of wine

52. Paragraph 135(2)(b) provides for the relief of excise duty imposed on wine that is produced by a wine licensee that qualifies as a small producer and packaged by, or on behalf of, that licensee.

53. A wine licensee qualifies as a small producer in a fiscal month if both of the following apply:

• the licensee's total sales of all wine packaged in Canada in the previous fiscal year did not exceed $50,000
• the licensee's total sales of all wine packaged in Canada during the current fiscal year before the current fiscal month do not exceed $50,000

54. A small producer must still be a wine licensee and fulfill all of the obligations associated with holding that licence.

55. Packaged wine that qualifies for this excise duty exemption is not entered into an excise warehouse, and a qualified small producer of wine does not need an excise warehouse to possess the exempt wine.

56. In addition to reporting bulk wine additions and reductions on page 3 of Form B265, the small producer must check the appropriate box at the bottom of that page to indicate that they are a small producer. Refer to Memorandum EDM4-1-2, Small producers of wine, for more information.

Bulk wine taken for analysis or destroyed in an approved manner

57. As per paragraphs 145(1)(a) and (b), no excise duty is payable by a wine licensee on bulk wine that is taken for analysis or destroyed if the method used has been approved by the CRA.

58. A wine licensee must submit a written request to their regional excise office to obtain approval for their method of analysis or destruction. For a list of the offices, go to Contact information – Excise and Specialty Tax Directorate. In the request, the licensee must specify if they are seeking approval for a specific occurrence or frequent occurrences. The licensee must also state the reason for the analysis or destruction (for example, alcoholic strength or quality control), where the wine will be analyzed or destroyed, the frequency, the quantities taken, and the controls that are in place. In addition, the licensee must keep adequate records to support their claims.

59. A wine licensee must report the quantities of bulk wine taken for analysis or destroyed in an approved manner under "Reductions to bulk wine inventory – Wine removed for other purposes: Non-duty-paid (specify)", on page 3 of Form B265.

Keeping records

60. Under subsection 206(1), every person that has a licence must keep all records that are necessary to determine whether they are in compliance with the Act.

61. Detailed information on the requirement to keep records is available in Memorandum EDM9-1-1, General requirements for books and records.

Returns and payments

62. Under section 160, a wine licensee must file Form B265 for each reporting period, calculate any excise duty payable in that return, and pay the amount owing. The return and payment are due no later than the last day of the first fiscal month that follows the reporting period.

63. A wine licensee that has more than one licence must file a separate return for each licence. For example, a wine licensee that also has an excise warehouse licence must file Form B262, Excise Duty Return – Excise Warehouse Licensee, in addition to Form B265.

64. For more detailed information on the requirement to file returns and pay excise duty, refer to Memorandum EDM10-1-1, Returns and payments. Information about the excise duty return for wine licensees and instructions on how to complete the return are available in Memorandum EDM10-1-6, Completing an excise duty return – Wine licensee.

Reporting periods

65. The default reporting period is a fiscal month; however, an authorized licensee may file excise duty returns twice a year (that is, semi-annual or fiscal half-year reporting periods).

66. For more information on reporting periods and how to determine eligibility and apply for semi-annual reporting, refer to Memorandum EDM10-1-1.

Branches or divisions filing separate returns

67. Subsection 164(1) states that a wine licensee that has branches or divisions with distinct operations under their wine licence may apply to the CRA for the authority to file separate returns for each branch or division. This request can be made by completing Form B269, Application or Revocation of the Authorization to File Separate Excise Duty Returns and Refund Applications for Branches or Divisions.

Claiming refunds

68. According to subsections 175(1) and 176(3), a wine licensee must submit a completed Form B256, Excise Act, 2001 – Application for Refund, to claim a refund of an amount of excise duty paid within two years after the licensee paid the amount.

69. When applying for a refund, the wine licensee must indicate the amount being claimed as well as the reason for claiming the refund. Under subsection 176(1), a wine licensee may only claim a refund of an amount of excise duty that was paid in error. On the application form, the licensee must tick box 1 in the section entitled "Reason for refund".

Restrictions

70. Subsection 189(4) states that a refund will not be paid to a wine licensee until the licensee has filed with the CRA or the Canada Border Services Agency all returns or other records that are required to be filed under the Excise Act, 2001, the Air Travellers Security Charge Act, the Customs Act, the Digital Services Tax Act, the Excise Act, the Excise Tax Act, the Global Minimum Tax Act, the Income Tax Act, the Select Luxury Items Tax Act, and the Underused Housing Tax Act.

71. For more information relating to the process and the legislative requirements for obtaining a refund, refer to Memorandum EDM10-3-1, Refunds.

Enforcement

72. Under Part 6, a wine licensee that fails to comply with the Act and the conditions or requirements of their licence may be subject to a penalty or face charges under the Act.

Explanation of terms used in this memorandum

73. The following terms are used in this memorandum, as per section 2:

Alcohol means spirits or wine.

Bottle-your-own premises are premises authorized under provincial legislation to supply alcohol from a marked special container for packaging by a purchaser. The excise duty has been paid on all marked special containers in these bottle-your-own premises.

A marked special container of wine is a container of a capacity greater than 100 litres that is marked in the prescribed form and manner to indicate it is intended for delivery to and use at a bottle-your-own premises. Refer to Memorandum EDM4-2-3 for more information.

Non-duty-paid packaged wine is wine that is packaged in accordance with the Act and on which the excise duty has been imposed but not paid.

Packaged wine means wine in a container with a capacity of not more than 100 litres that is ordinarily sold to consumers without being repackaged into smaller containers. Packaged wine also includes marked special containers of wine.

Personal use, in relation to the use of wine, means that the wine is produced by an individual and is used by that individual or by others at the individual's expense. It does not include the sale or other commercial use of the wine.

To produce wine means to bring it into existence by fermentation. The person that initiates the fermentation process will be the producer of the wine. For excise duty purposes, wine is produced when it has completed initial fermentation. At that time, a wine licensee must determine the volume of the wine produced using approved instruments. The total quantity must be reported on page 3 of Form B265 under the section "Additions to bulk wine inventory", on the line "Wine produced".

Take for use, in respect of alcohol, means to consume, analyze, or destroy alcohol or to use alcohol for any purpose that results in a product other than alcohol.

Wine means:

a. a beverage, containing more than 0.5% absolute ethyl alcohol by volume, that is produced without distillation (except distillation to reduce the absolute ethyl alcohol content) by fermentation of one of the following

i. non-grain agricultural product

ii. non-grain plant or plant product that is not an agricultural product

iii. a product wholly or partially derived from a non-grain agricultural product or plant or from a non-grain plant product

b. sake

c. a beverage described above that is fortified to not more than 22.9% absolute ethyl alcohol by volume

A wine licensee is a person that holds a wine licence under section 14.

Further information