Tobacco tax applies to all tobacco products sold in Ontario. Tobacco products include cigarettes, cigars and other tobacco (e.g., loose, bidis, snuff, chewing, leaf, blunt wraps, water pipe and snus).
Who pays tobacco tax?
In general, every consumer who purchases tobacco products in Ontario must pay tobacco tax through a registered tobacco retail dealer. First Nations individuals who are registered Indians are exempt from payment of tobacco tax on tobacco products purchased for their own consumption on their reserves applicable under Ontario's First Nations Cigarette Allocation System.
Foreign Diplomats are also exempt for payment of tobacco tax on tobacco products purchased for their own consumption through their diplomatic mission.
Who must register under the Tobacco Tax Act?
Anyone who manufactures, imports, exports, marks, wholesales or retails tobacco products must be registered under the Tobacco Tax Act. Those who transport tobacco in bulk into or from Ontario must also register.
Who is responsible for reporting and remitting tobacco tax?
Registered importers and wholesalers designated by the Minister as collectors of tobacco tax report and remit the tax monthly. They reimburse themselves by collecting an amount equal to the tax when they sell tobacco products to non collectors such as retailers.
What do retailers need to know about selling cigarettes?
If you sell cigarettes, they must be legal. Legal cigarettes are identified by:
- Ontario's yellow tear tape:
- the term "ON" printed on the outside of the package, and
- a purchase price that is more than $47.12 per carton.
Tobacco retailers must have a permit issued by the Ministry of Finance to sell tobacco products to consumers in Ontario.
Tobacco retailers who on June 30, 2010, held a valid vendor's permit issued under the Retail Sales Tax Act (RST) should retain it to purchase tobacco products from registered wholesalers after June 30, 2010. Retailers with a valid RST vendor's permit on June 30, 2010, are deemed to hold a tobacco retail dealer's permit and may use their RST vendor's permit as if it is a tobacco retail dealer's permit.
Effective July 1, 2010, tobacco retailers who did not have a valid RST vendor's permit on June 30, 2010, must obtain a tobacco retail dealer's permit issued under the Tobacco Tax Act.
For information regarding retailing on reserve, refer to Ontario's First Nations Cigarette Allocation System.
How do I obtain a permit?
If you need a tobacco retail dealer's permit, you may apply by mail or fax using the Application for Tobacco Retail Dealer's Permit [PDF - 402 KB]. You may also apply by telephone at 1 866 ONT-TAXS (1 866 668-8297). When prompted, say "tobacco" to speak to a representative.
Tobacco retailers must ensure they purchase tobacco products only from a wholesaler who has a valid wholesaler's permit issued by the ministry's Client Services Branch. To confirm whether your supplier is a registered wholesaler, view the Tobacco Tax Registrant List.
Tobacco retailers should also contact their municipality about any bylaws concerning the sale of tobacco products and the Canada Revenue Agency about the Harmonized Sales Tax.
What do wholesalers need to know about selling tobacco?
If you sell tobacco for resale, you must register for a wholesaler's permit, and you must buy all your tobacco from a registered wholesaler or manufacturer. As of July 1, 2010, before selling or delivering tobacco products to a retailer, a wholesaler must ensure the retailer:
- held a valid retail sales tax vendor's permit on June 30, 2010,
- is an authorized reserve retailer under Ontario's First Nations Cigarette Allocation System, or
- holds a tobacco retail dealer's permit under section 3.1 of the Tobacco Tax Act