Tobacco Tax

The 2014 Ontario Budget tabled on July 14, 2014 included a number of proposed tax and benefit related changes. Learn more.

The Ontario Ministry of Finance is responsible for administering the Tobacco Tax Act. Generally, provincial tobacco tax applies to all tobacco products sold in Ontario. Tobacco products include:

  • cigarettes
  • cigars
  • cigarillos
  • pipe tobacco
  • fine cut tobacco
  • other tobacco products (e.g., loose, bidis, snuff, chewing tobacco, blunt wraps, water pipe tobacco and snus)

Who pays tobacco tax?

All purchasers of tobacco products in Ontario must pay the tax, except:

  • First Nations individuals registered as Indians under the Indian Act (Canada) who buy certain tobacco products on a reserve for their own personal use
  • diplomats who buy tobacco products for their own personal use

Who is responsible for reporting and remitting tobacco tax?

A retailer pays to the tobacco wholesaler an amount equal to the Ontario tobacco tax. That tax collected by the tobacco wholesaler, who is a designated collector, is reported and remitted to the Ministry of Finance. Retailers are repaid an amount equal to the tax paid to the wholesaler when selling tobacco products.

Tax Rates

The current tax rates are:

  • 13.975¢ per cigarette
  • $2.80 per pack of 20 cigarettes
  • $3.49 per pack of 25 cigarettes
  • $27.95 per carton of 200 cigarettes
  • 13.975¢ per gram or part gram of tobacco product other than cigarettes and cigars (e.g. fine cut tobacco)
  • The tax on cigars is 56.6 per cent of the taxable price

Cigarettes sold in Ontario are also subject to federal excise duty and HST.

Who needs to register?

You need to register with the province if you:

  • manufacture, import, export, mark, wholesale or retail tobacco products or
  • transport tobacco in bulk into or from Ontario

Note: Tobacco in bulk is 10,000 or more cigarettes, 200 or more cigars or ten kilograms or more of any tobacco product other than cigarettes or cigars, such as fine cut tobacco.

To inquire about registering with the province:

  • call the Ministry of Finance at 1 866 ONT-TAXS ( 1 866 668-8297)
  • when prompted, say "tobacco"
  • you will be transferred to a representative who can explain the registration process and requirements

Learn more about online applications here.

Surety bond/letter of credit

Before the Minister of Finance issues you a permit, registration certificate or a designation you may be required to provide and maintain acceptable security through a surety bond or letter of credit. Security helps ensure compliance with the Tobacco Tax Act (Act).

In most cases, the amount of security required equals the greater of the average of three month’s tax and an amount ranging from $10,000 to $1,000,000 depending on registration type(s).

Selling cigarettes and other tobacco products

Legal cigarettes and fine cut tobacco

Ontario has adopted the federal tobacco stamping system for marking packages of cigarettes and packages of fine cut tobacco that are sold in Ontario. Ontario’s tobacco stamp replaces the yellow tear tape on cigarette packages.

All packages of cigarettes and packages of fine cut tobacco sold to consumers who have to pay tobacco tax in Ontario must be marked with the ON DUTY PAID CANADA DROIT ACQUITTÉ tobacco stamp.

Cigarette and fine cut tobacco packages with a peach-coloured federal stamp may only be purchased for personal consumption:

  • on a reserve by First Nation individuals
  • by diplomats
  • from a duty-free store

The tobacco stamp contains security features and has a yellow background with the letters ‘ON’ in white and in black letters, the words ‘DUTY PAID CANADA DROIT ACQUITTÉ’.

sample of the Ontario-adapted federal stamp

Available quantities:

Cigarette Packages
Fine Cut Tobacco Packages
  • 20 cigarettes
  • 50 grams
  • 200 grams
  • 25 cigarettes
  • 100 grams
  • 250 grams
 
  • 150 grams
  • 400 grams

Illegal tobacco

Unless authorized under the Act, it is against the law to buy, possess or distribute any quantity of unmarked tobacco products or any other untaxed tobacco product. Unmarked tobacco products are packages of cigarettes and fine cut tobacco that do not have the ON DUTY PAID CANADA DROIT ACQUITTÉ tobacco stamp. Under the Act, there are serious consequences for buying, possessing or distributing this type of tobacco product without authorization. You can be fined, sent to jail, have your tobacco products seized, your vehicle impounded and, if you are a retailer, prohibited from selling tobacco products for up to 180 days.

If you are convicted of possessing unmarked cigarettes for the purpose of sale you may be fined a minimum fine of $500 plus three times the tax on the unmarked cigarettes you were going to sell. You could also be sentenced to up to two years in jail.

What is the Ontario government doing to deal with illegal tobacco?

Please see the Illegal Tobacco webpage.

Who can sell tobacco products?

Retailers

To sell tobacco products to a consumer you need to hold a tobacco retail dealer’s permit issued under the Act. If you held a vendor's permit under the Retail Sales Tax Act that was valid on June 30, 2010, or are an authorized reserve retailer under Ontario's First Nations Cigarette Allocation System you are deemed to hold a retail dealer’s permit.

As a retail dealer you must ensure you buy tobacco products from a ministry-authorized wholesaler with a valid permit. This permit must be displayed in a prominent position at the wholesaler’s principal place of business. In addition, you should:

  • contact your municipality about any bylaws about the sale of tobacco
  • contact your local health unit about requirements under the Smoke-Free Ontario Act (SFOA) for the sale, storage, display and promotion of tobacco products
  • contact the Canada Revenue Agency about the HST

Download: Application for Tobacco Retail Dealer’s Permit.

Learn more about basic rules for tobacco retailers.

See if a supplier is a registered wholesaler.

Wholesalers

You need to hold a wholesaler's permit under the Act if you sell tobacco products for resale.

As a wholesaler, before you sell or deliver tobacco products to a retailer, you must to confirm that the retailer holds a retail dealer’s permit under the Act, a vendor’s permit under the Retail Sales Tax Act that was valid on June 30, 2010, or is an authorized reserve retailer under Ontario’s First Nations Cigarette Allocation System.

Both the Tobacco Tax Act and the Smoke Free Ontario Act prohibit a wholesaler or distributor from delivering tobacco products to a location that has been issued a notice of prohibition against the sale, storage and delivery of tobacco products. The Ministry of Health and Long-Term Care notifies wholesalers and distributors in writing of all tobacco retail locations that are subject to an Automatic Prohibition. Through an e-alert, the Ministry of Finance notifies wholesalers of tobacco retail locations that are temporarily prohibited from selling, offering for sale or storing tobacco products.

Filing a tobacco tax return

Once you register with the Ministry of Finance the ministry will mail to you each month a personalized return. You must complete this return, even if you did not have any activity during the reporting period.

Didn’t get a return this month? Please call the Ministry of Finance at 1 866 ONT-TAXS (1 866 668-8297).

You can file your return:

  • online, using ONT-TAXS online
  • by mail to: Ministry of Finance, 33 King Street West, PO Box 620, Oshawa ON L1H 8E9
  • in person at any Ministry of Finance tax office (in the drop boxes provided), or at a Service Ontario location


Retailers are not required to complete returns.

Due dates

Completed tobacco tax returns, along with any tobacco tax payable, are to be delivered to the ministry by the 28th day of the month following the end of your reporting period.

There are a few exceptions, including:

  • Markers of cigarettes and fine cut tobacco:  return is due by the 28th day of the month unless you’re also a collector, then return is due on the 10th
  • Collectors and importers: return is due by the 10th day of the month

How to complete your tobacco tax return.

Tobacco tax refunds

If you collect tobacco tax, you may be entitled to a refund if tobacco products were:

  • returned either to a manufacturer or importer to be destroyed because they are unfit for use
  • exported in bulk out of Ontario for sale in another province or state

If you purchase tobacco products for resale, you may be entitled to a refund of tobacco tax for:

  • tobacco that was stolen, burned or contaminated
  • tobacco sold where all or part of the sale price has not been paid by the purchaser and has become an uncollectible debt (referred to as a "bad debt")

Read more about bad debts.

Download: application for refund due to loss of product [PDF – 230 KB].
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