Beer and Wine Tax
On October 12, 2018, the government proposed not to move forward with the beer basic tax rates increase that was scheduled for November 1, 2018. The passage of the Restoring Trust, Transparency and Accountability Act, 2018, has confirmed that the beer basic tax rates remain at the rates set on March 1, 2018 until February 28, 2019.
Beer and wine taxes are included in the price you pay for:
- beer made by an Ontario beer manufacturer, microbrewer or brew pub that you buy from:
- Brewers Retail Inc. (i.e., The Beer Store)
- licensed establishments, such as restaurants, bars and brew pubs
- on‑site retail stores of beer manufacturers or microbrewers, and
- southern agency stores of the LCBO (e.g., cottage‑country agency stores).
- wine and wine coolers:
- that you buy from an Ontario winery retail store, on or off the winery site, and
- manufactured by an owner of – and purchased from – a wine boutique located in the shopping area of a grocery store authorized to sell the wine as an agent of the wine boutique owner.
For the purposes of this page, this distribution arrangement will be referred to as a wine boutique and wine includes wine coolers.
If you make your own beer or wine, or if you purchase these beverages from the Liquor Control Board of Ontario (LCBO), you do not pay beer and wine taxes on those beverages.
Tax rates
Beer
Beer tax includes:
- beer basic tax
- volume tax
- environmental tax (if applicable).
Draft beer made and bought at a brew pub or a secondary location of the brew pub is subject to the beer basic tax only.
Beer basic tax
The beer basic tax is calculated based on the volume of beer bought.
The tax rate that applies to the beer depends on:
- what type of beer it is (draft beer (e.g., from a keg 18 litres or larger) or non‑draft beer (e.g., bottled beer), and
- who made the beer (beer manufacturer, microbrewer, or brew pub).
| Effective date | Beer made by Ontario beer manufacturers | Beer made by Ontario microbrewers | Beer made and sold at Ontario brew pubs | ||
|---|---|---|---|---|---|
| Draft beer | Non‑draft beer | Draft beer | Non‑draft beer | Draft beer | |
| March 1, 2018 to February 28, 2019 |
72.45 ¢/L | 89.74 ¢/L | 35.96 ¢/L | 39.75 ¢/L | 33.41 ¢/L |
For example, on a 341mL bottle of beer made by a microbrewer purchased on March 15, 2018, the beer basic tax will be 0.341L × $0.3975/L = $0.1355.
Adjustments to beer basic tax rates
The beer basic tax rates are adjusted annually on March 1st, unless March 1st falls on a weekend, based on the Consumer Price Index for Ontario over the past three years. In addition to the annual adjustments, the 2015 Ontario Budget called for an increase of 3 cents per litre to the rates on November 1 in each of 2015, 2016, 2017 and 2018. However, on October 12, 2018, the government announced it was proposing not to move forward with the beer basic tax rate increase that was scheduled for November 1, 2018. The Restoring Trust, Transparency and Accountability Act, 2018, that contained the proposal, has confirmed that there is no November 1, 2018 increase.
Who are microbrewers
To be considered a microbrewer for a given sales year, all of the following conditions must be met:
- The brewer's worldwide production (not just in Ontario) for the past production (calendar) year is, pursuant to the 2018 Ontario Budget, not more than 49,000 hectolitres (4.9 million litres). This figure includes the sum of all of the beer:
- the brewer makes, even if the beer is made for another brewer
- the brewer's affiliates make, even if the beer is made for another brewer, and
- any other brewer makes for the brewer or for any of the brewer's affiliates
- in the preceding producing year, if the brewer has an affiliate that also makes beer, that affiliate must also have been a microbrewer, and
- in the preceding production year, if there is a beer‑making arrangement where another brewer makes beer for the brewer, that other brewer must have been a microbrewer at some point in that production year.
If you are a microbrewer for the current sales year and wish to remain a microbrewer in the upcoming year, you must meet all of the above conditions or you will lose your status as a microbrewer and any resulting benefits.
Read on: list of Ontario beer manufacturers and microbrewers and the brands of beer they make.
Beer volume tax
The beer volume tax is calculated based on the volume of beer bought. The tax rate is 17.6 cents per litre regardless of whether the beer is draft beer or non‑draft beer and whether the beer was made by a beer manufacturer or a microbrewer.
The beer volume tax does not apply to draft beer made and bought at a brew pub or a secondary location of the brew pub.
Environmental tax
The environmental tax is 8.93 cents for each non‑refillable container in which the beer bought is packaged.
The environmental tax does not apply to draft beer made and bought at a brew pub or a secondary location of the brew pub.
Historical beer taxes rates
| Effective date | Beer made by Ontario beer manufacturers | Beer made by Ontario microbrewers | Beer made and sold at Ontario brew pubs | ||
|---|---|---|---|---|---|
| Draft beer | Non‑draft beer | Draft beer | Non‑draft beer | Draft beer | |
| November 1, 2017 to February 28, 2018 | 71.31 ¢/L | 88.33 ¢/L | 34.82 ¢/L | 38.34 ¢/L | 32.88 ¢/L |
| March 1, 2017 to October 31, 2017 | 68.31 ¢/L | 85.33 ¢/L | 31.82 ¢/L | 35.34 ¢/L | 29.88 ¢/L |
| November 1, 2016 to February 28, 2017 |
67.10 ¢/L | 83.82 ¢/L | 30.61 ¢/L | 33.83 ¢/L | 29.35 ¢/L |
| March 1, 2016 to October 31, 2016 |
64.10 ¢/L | 80.82 ¢/L | 27.61 ¢/L | 30.83 ¢/L | 26.35 ¢/L |
| November 1, 2015 to February 29, 2016 | 63.15 ¢/L | 79.63 ¢/L | 26.66 ¢/L | 29.64 ¢/L | 25.96 ¢/L |
| March 2, 2015 to October 31, 2015 |
60.15 ¢/L | 76.63 ¢/L | 23.66 ¢/L | 26.64 ¢/L | 22.96 ¢/L |
| March 3, 2014 to March 1, 2015 |
59.20 ¢/L | 75.42 ¢/L | 22.71 ¢/L | 25.43 ¢/L | 22.60 ¢/L |
| March 1, 2013 to March 2, 2014 |
58.10 ¢/L | 74.02 ¢/L | 21.61 ¢/L | 24.03 ¢/L | 22.18 ¢/L |
| March 1, 2012 to February 28, 2013 | 56.79 ¢/L | 72.35 ¢/L | 20.30 ¢/L | 22.36 ¢/L | 21.68 ¢/L |
| March 1, 2011 to February 29, 2012 | 55.68 ¢/L | 70.94 ¢/L | 19.19 ¢/L | 20.95 ¢/L | 21.26 ¢/L |
| July 1, 2010 to February 28, 2011 |
54.75 ¢/L | 69.75 ¢/L | 18.26 ¢/L | 19.76 ¢/L | 20.90 ¢/L |
Wine
Wine tax includes:
- wine basic tax
- volume tax
- environmental tax.
Wine basic tax
The wine basic tax is calculated as a percentage of the retail price of the wine bought. The retail price is the price set for the wine by the LCBO (or the winery, if the LCBO has not set a price), less the total of:
- any deposit on the container, and
- all taxes imposed on the purchase of the beverage under
- Part IX of the Excise Tax Act (Canada) (i.e., the harmonized sales tax), and
- Alcohol, Cannabis and Gaming Regulation and Public Protection Act, 1996 (i.e., the wine tax).
The tax rate that applies to the retail price of the wine depends on:
- whether it is an Ontario or non‑Ontario wine, and
- whether it is:
- purchased at a winery retail store (on‑site or off‑site of the winery), or
- manufactured by an owner of – and purchased from – a wine boutique.
Effective date
(when the sale or distribution of the wine it made)
(per cent of retail price of wine)Ontario Non‑Ontario At winery retail store At wine boutique (boutique operator's wine) At winery retail store At wine boutique (boutique operator's wine) Before June 1, 2016 6.1 n/a 16.1 n/a From June 1, 2016 to October 27, 2016 6.1 n/a 17.1 n/a From October 28, 2016 to December 31, 2016 6.1 6.1 17.1 17.1 From January 1, 2017 to March 31, 2017 6.1 7.1 17.1 17.1 From April 1, 2017 to March 31, 2018 6.1 8.1 18.1 19.1 From April 1, 2018 to March 31, 2019 6.1 9.6 19.1 22.6 From April 1, 2019 6.1 11.1 20.1 26.6
For tax purposes, Ontario generally means that the wine is produced from 100 per cent Ontario‑grown produce.
Wine volume tax
The wine volume tax is calculated based on the volume of wine and whether the beverage is wine or a wine cooler.
| Type of product | Wine volume tax rate |
|---|---|
| Wine | 29 ¢/L |
| Wine cooler | 28 ¢/L |
For example, on a 750mL bottle of wine sold at a winery retail store, the wine volume tax would be 0.750L × $0.29/L = $0.2175.
Environmental tax
The environmental tax is 8.93 cents for each non‑refillable container in which the wine or wine cooler bought is packaged.
Ontario beer vendors, beer manufacturers, microbrewers, brew pubs and wineries
A beer manufacturer, microbrewer or licensee of a brew pub collects the beer taxes and amounts on account of the beer taxes on the beer it distributes in Ontario and must report and remit them to the Ministry of Finance. The reporting period is monthly and the return and tax remittance must be received by the 20th day of the next month.
A winery collects the wine taxes and amounts on account of the wine taxes on the wine it distributes at its Ontario winery retail store(s) and any wine boutique that it operates, and must report and remit the taxes to the Ministry of Finance. The reporting period is monthly (or, if the winery qualifies and elects, each set quarter) and the return and tax remittance must be received by the 20th day after the end of the reporting period.
Filing a beer tax return or a wine tax return
Learn how to complete your beer tax return and schedules or your wine tax return.
Information about filing requirements, supporting schedules, penalties for late filing and failure to remit tax collected or payable and payment information for remitting the tax is also provided.
When beer vendors, breweries, wineries and certain authorized grocery stores are deemed to be buyers of their own products
A beer manufacturer, microbrewer or licensee of a brew pub is deemed to be the buyer of the beer that it distributes in Ontario without charge and must pay the beer taxes on that beer. A beer vendor is deemed to be the buyer of the beer that it buys but does not sell.
A winery is deemed to be the buyer of the wine it distributes in Ontario without charge and must pay the wine taxes on that wine. If a winery provides samples of wine at a charge and the charge does not cover all of the wine taxes associated with that sample, the winery is deemed to be the buyer of the sample to the extent of the shortfall and must pay the shortfall in the wine taxes for that sample.
An operator of a grocery store authorized to sell wine from a wine boutique is deemed to be the buyer of wine manufactured by the wine boutique owner if the grocery store distributes the wine without charge.
Limited exemption for Ontario beer manufacturers, microbrewers, brew pubs and wineries
A beer manufacturer, microbrewer or licensee of a brew pub may claim an annualized limited beer tax exemption up to 10,000 litres of beer it distributes without charge in Ontario to promote its beer.
Read on: Promotional distribution exemption for Ontario beer manufacturers and brew pubs.
A winery may claim an annualized limited wine tax exemption up to 10,000 litres of wine it distributes without charge in Ontario to promote its wine.
Read on: Promotional distribution exemption for Ontario wineries.
Tax Credit for Small Beer Manufacturers
The Taxation Act, 2007, includes a refundable corporate tax credit for small beer manufacturers. Beer manufacturers with permanent establishments in Ontario may qualify in respect of eligible sales of draft and non‑draft beer sold to purchasers in Ontario during a sales year, if they meet certain criteria, including limits on production.
For additional information, refer to the Taxation Act, 2007, or contact the Ministry of Finance at 1‑866‑ONT‑TAXS (1‑866‑668‑8297).
Tax‑included pricing
The purchase price of all beer sold to purchasers by beer vendors (including beer manufacturers and microbrewers that operate their own brewery retail store) and all wine sold to purchasers at winery retail stores and wine boutiques must include all beer and wine taxes payable.
Beer vendors, wineries and grocery stores with wine boutiques must provide information on the amount of the beer and wine taxes included in the price in a manner approved by the Minister of Finance.
Alcohol licensing
The Alcohol and Gaming Commission of Ontario (AGCO) and LCBO are responsible for the general regulation of the beer and wine industries in Ontario, including the licensing of alcohol manufacturers and sellers.
Frequently Asked Questions for Microbrewers
What are sales year and production year?
A sales year is a period of approximately twelve months that runs from March 1 to the end of the next February unless:
- March 1 is a Saturday or Sunday, in which case the sales year begins on the following Monday.
- The last day of February is a Friday or Saturday, in which case the sales year ends on the following Sunday.
A production year in relation to a sales year is the calendar year immediately before the beginning of the sales year. For example, for the sales year from March 2, 2015 to February 29, 2016, the relevant production year is January 1, 2014 to December 31, 2014.
What does the annual worldwide production include when determining whether a brewer qualifies as a microbrewer?
For a brewer to be considered a microbrewer for a sales year, its annual worldwide beer production for the past production year must not be more than, pursuant to the 2018 Ontario Budget, 49,000 hectolitres (4.9 million litres). Worldwide production means anywhere in the world, not just Ontario, and includes all beer manufactured during the production year by:
- the microbrewer, even if the beer is manufactured under contract for another brewer
- any affiliate of the microbrewer, even if the beer is manufactured under contract for another brewer, and
- another microbrewer under contract for the microbrewer (or its affiliates).
Could having a contracting arrangement with another brewer affect a brewer's microbrewer status?
Yes. If the microbrewer or any of its affiliates has an arrangement for beer to be made for any of them by another brewer, that other brewer must be a microbrewer at some point in the production year in order for the microbrewer and its affiliate(s) to qualify for and maintain their microbrewer status.
I am a microbrewer and have an arrangement for final packaging with a non‑microbrewer. Will this arrangement affect my microbrewer status?
An arrangement with a non‑microbrewer for only final packaging of your beer will not affect your microbrewer status.
In some cases, final packaging of the beer requires the filtering and carbonation process be performed immediately before the packaging, and in certain circumstances, some substances can only be added to the beer at the time of final filtration. In these situations, provided that they must be performed as part of the final packaging, filtering, carbonating and addition of substance will not affect your microbrewer status.
Does a brewer need to meet the conditions every year to maintain its microbrewer status?
Yes.
Frequently Asked Questions about the Small Beer Manufacturers' Tax Credit
What is the Small Beer Manufacturers' Tax Credit?
The Alcohol, Cannabis and Gaming Regulation and Public Protection Act, 1996 (ACGRPPA) imposes a basic beer tax on purchases in Ontario of all beer made by Ontario beer manufacturers, with microbrewers benefiting from reduced beer basic tax rates.
To qualify as a microbrewer and benefit from the reduced beer basic tax rates, one of the requirements is that the microbrewer's worldwide production of beer for the production year must not be more than, pursuant to the 2018 Ontario Budget, 4.9 million litres (49,000 hectolitres (hL)).
To complement the beer basic tax under the ACGRPPA, the Small Beer Manufacturers' Tax Credit under the Taxation Act, 2007 provides for a refundable tax credit available to eligible beer manufacturers having worldwide production in the previous year, pursuant to the 2018 Ontario Budget, over 4.9 million litres (49,000 hL) but less than 30 million litres (300,000 hL).
Who qualifies for the credit?
A beer manufacturer may qualify in respect of eligible sales of draft and non‑draft beer sold to purchasers in Ontario during a sales year, if it meets certain criteria including:
- it has a permanent establishment in Ontario
- it cannot be a microbrewer eligible for the reduced beer basic tax rates
- its worldwide production of beer for the previous production year must be, pursuant to the 2018 Ontario Budget, over 4.9 million litres (49,000 hL) but less than 30 million litres (300,000 hL)
- its worldwide production of beer was never more than 20 million litres (200,000 hL) in any production year ending before January 1, 2018 and 30 million litres (300,000 hL) in any production year beginning after December 31, 2017, and
- its total eligible sales in any sales year was never more than 20 million litres (200,000 hL).
How much is the tax credit?
The maximum tax credit available to an eligible small brewer is, pursuant to the 2018 Ontario Budget, $2,449,510 for non‑draft beer and $1,788,010 for draft beer on eligible sales exceeding 49,000 hL and up to and including 200,000 hL. The tax credit is subject to a phase‑out once eligible sales exceed 75,000 hL and is fully eliminated when eligible sales exceed 200,000 hL in the sales year.
How to receive the credit?
To receive the tax credit, a beer manufacturer must apply not more than 2 years after the end of the sales year for which it was eligible for the credit.
Provided it qualifies, a beer manufacturer will receive the tax credit as a lump‑sum at the end of the sales year for which it is eligible for the credit. However, it may receive the tax credit in monthly instalments during the sales year if the request is made before the start of the sales year for which it is eligible for the credit.
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