Dear Valued Customer,
As the vaping industry continues to evolve and grow, the Canadian Federal Government has decided to implement an excise tax on vaping products that contain vaping substances with or without nicotine. As your retailer, please find below some key information that will help you understand this new regulation and how it will impact you.
What is excise tax?
On April 7, 2022, the Federal Government announced excise duty on vaping products. This excise duty (or excise tax) applies to any vaping substances sold in Canada that are intended for use in a vaping device.
All vaping products that are meant for sale in the Canadian duty-paid market are required to have an excise stamp affixed to the product as proof that duties have been paid. Canadian manufacturers and importers are responsible for applying excise stamps to vaping products that are intended for sale in the Canadian duty-paid market and remit payments to the Canada Revenue Agency (CRA)
When will the excise tax be implemented?
Effective October 1, 2022, manufacturers and importers of vaping products sold at retail stores are required to be licensed or registered with the Canada Revenue Agency (CRA).
For retailers, the excise tax regulations will come into effect on January 1, 2023. As a retailer, we have a grace period to sell unstamped products until December 31, 2022. Starting January 1, 2023, all products containing vape substances sold in our stores (including e-commerce sales) will require a vaping excise stamp affixed to the product.
How much will the exercise tax increase the prices and how will they be calculated?
The duty is calculated based on the liquid volume of vaping substance contained in a single container (in ML). At this time, duties are charged and collected on the Federal level.
Federal Taxes Calculations
- For the first 10 ML of vaping substance, a duty is applied at a rate of $1.00 per 2 ML of the vaping substance.
- For each additional 10 ML of vaping substance thereafter, a duty is applied at a rate of $1.00 per 10 ML of the vaping substance.
- For a closed pod pack (3 pods cartridges), the duty payable will be CAD $1.00 per 2 ML, which equates to an increase of $3.00 per closed pod pack.
Using the example above, the same closed pod pack with 6 ML of vaping substance with Federal and Provincial/Territorial duties would be $2.00 per 2 ML, which equates to $6.00.
- A 60 ML bottle of e-liquid at Federal excise duties would be $1.00 per 2 ML for the first 10 ML, which equates to $5.00. The remaining 50 ML would be $1.00 per 10 ML which equates to another $5.00.
- The total federal excise duties would be $10.00.
- A 30 ML bottle of e-liquid will be taxed $5.00 on the first 10 ML and then $1.00 for every 10 ML thereafter.
30ML will be $14.38 plus duty tax which is $7.00= $21.38 plus HST = $24.58
60ML will be 23.99 plus duty tax which is $11.00= $34.99 plus HST= $40.23
What products are affected by excise tax?
Vaping products that are vaping devices that contain vaping substances or that are vaping substances in immediate containers.
- Taxed products: closed pods, disposable vapes, e-liquid bottles or bottles containing any component intended for vaping (nicotine, VG, PG, flavoring).
How is the total price calculated?
Product price + excise tax + any applicable provincial taxes and the Federal Goods and Services Tax (GST)
What about stores who still sell unstamped products from January 1, 2023 and onward?
The Government is ramping up enforcement and there will be penalties for distributors and retailers who do not comply.
Non-compliant businesses will potentially be charged up to 200% of the duty owed and have the products seized.