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Vol. 137, No. 12 — March 22, 2003 Continuation of Amalgamated or Merged Corporations RegulationsStatutory Authority Excise Act, 2001 Sponsoring Agency Canada Customs and Revenue Agency REGULATORY IMPACT ANALYSIS STATEMENT Description The new Excise Act, 2001 (the "Act") received Royal Assent on June 13, 2002, thereby replacing the legislative provisions of the existing Excise Act, regarding the production and distribution of alcohol and tobacco products as well as general provisions. The Act authorizes the Governor in Council to make identified related regulations in support of the new legislation. One of the goals in developing the Act was to align excise legislation more closely with other statutes administered by the Canada Customs and Revenue Agency (CCRA). As a result, section 213 of the Act was written to reflect section 271 of the Excise Tax Act which states that, where two or more corporations amalgamate or merge, the general rule is that the resultant corporation becomes a new legal person, separate from each of the corporations that formed it. However, for prescribed purposes, the new corporation may be regarded as the same as, and a continuation of, each of its predecessor corporations. The Continuation of Amalgamated or Merged Corporations Regulations (the "Regulations") were written to identify Parts 5 and 6 of the Act as "prescribed purpose," which means that corporations that have amalgamated or merged are still liable under Parts 5 and 6 even though they have formed a new corporation. Part 5 deals with General Provisions concerning Duty and Other Amounts Payable and Part 6 contains the Enforcement provisions. Alternatives There is no reasonable alternative to making these Regulations. In order to fulfill the requirements of section 213 of the Act, these Regulations are necessary to identify the "prescribed purpose" which applies. Benefits and Costs There are no increased costs as a result of these Regulations. The benefit is that section 213 of the new Act now aligns the treatment of amalgamations and mergers with other legislation administered by the CCRA and allows for fair and equitable collection of duty payable and application of the enforcement provisions. Consultation The CCRA and the Department of Finance carried out extensive consultations with the affected industries. Draft regulations were released in December 2001, and a notice was distributed in April 2002 to all current and potential licence and registration holders drawing their attention to the draft regulations and asking for submissions by June 30, 2002. Personal presentations and meetings were held with industry groups expressing interest, and their comments and suggestions were actively sought and taken into consideration. There were no comments received with respect to these Regulations. Compliance and Enforcement The existing Excise Act does not contain any specific provisions for amalgamations or mergers and how they are to be treated. These Regulations will allow for consistent and equitable treatment under the collection and enforcement provisions of the new Excise Act, 2001. Mr. Mark Hartigan, Manager, Excise Act, 2001 — Implementation, Excise Duties and Taxes Division, Excise and GST/HST Rulings Directorate, Policy and Legislation Branch, Place de Ville, 20th Floor, 320 Queen Street, Ottawa, Ontario K1A 0L5, (613) 954-5894 (Telephone), (613) 954-2226 (Facsimile). Notice is hereby given that the Governor in Council, pursuant to paragraph 304(1)(o) of the Excise Act, 2001 (see footnote a) , proposes to make the annexed Continuation of Amalgamated or Merged Corporations Regulations. Interested persons may make representations with respect to the proposed Regulations within 30 days after the date of publication of this notice. All such representations must cite the Canada Gazette, Part I, and the date of publication of this notice, and be addressed to Mr. Mark Hartigan, Policy and Legislation Branch, Canada Customs and Revenue Agency, 20th Floor, Tower A, Place de Ville, 320 Queen Street, Ottawa, Ontario K1A 0L5. Persons making representations should identify any of those representations the disclosure of which should be refused under the Access to Information Act, in particular under sections 19 and 20 of that Act, and should indicate the reasons why and the period during which the representations should not be disclosed. They should also identify any representations for which there is consent to disclosure for the purposes of that Act. Ottawa, March 20, 2003 EILEEN BOYD Assistant Clerk of the Privy Council CONTINUATION OF AMALGAMATED OR MERGED CORPORATIONS REGULATIONS PRESCRIBED PURPOSES 1. For the purposes of section 213 of the Excise Act, 2001, the purpose of applying any provision of Parts 5 and 6, other than section 213, of that Act is a prescribed purpose. COMING INTO FORCE 2. These Regulations take effect on July 1, 2003. [12-1-o] Losses of Bulk Spirits and Packaged Alcohol RegulationsStatutory Authority Excise Act, 2001 Sponsoring Agency Canada Customs and Revenue Agency REGULATORY IMPACT ANALYSIS STATEMENT Description The new Excise Act, 2001 (the "Act") received Royal Assent on June 13, 2002, thereby replacing the legislative provisions of the existing Excise Act, regarding the production and distribution of alcohol and tobacco products. The Act authorizes the Governor in Council to make identified related regulations in support of the new legislation. Accordingly, the Losses of Bulk Spirits and Packaged Alcohol Regulations (the "Regulations") have been written to detail the prescribed circumstances under which the excise duty that is imposed on bulk spirits or packaged alcohol is relieved if the person responsible for them loses the bulk spirits or packaged alcohol. Specifically, they provide the circumstances under which, and the conditions that must be fulfilled: (a) for a person to cease to be responsible for bulk spirits that are lost; (b) an excise warehouse licensee to be relieved of duty on non-duty-paid packaged spirits that are lost; and (c) for an excise warehouse licensee or a licensed user to be relieved of duty on non-duty-paid packaged wine that is lost. To meet the circumstances described, the person responsible for the spirits at the time of the loss must have records that substantiate the loss. The relief of duty on bulk spirits and non-duty-paid packaged alcohol provided for by these Regulations ensures that persons are not required to remit duty on alcohol that is lost due to acceptable manufacturing practices, and that is never entered for consumption or taken for use due to circumstances outside of their control. Currently, the Canada Customs and Revenue Agency (CCRA) may consider an application for remission of excise duty where it can be established that alcohol so lost could not have gone into consumption. The CCRA recognizes that accidental losses, in addition to those caused by fire, may occur through no fault or negligence on the part of the licensee. No remission of excise duty is considered for theft as there can be no assurance that the stolen alcohol has not entered consumption through illegal avenues. These Regulations will provide the same provisions for relief and remission of duty currently provided for under subsection 138(1) of the existing Excise Act; the existing Order Respecting the Remission of Excise Duty on Spirits Destroyed by Accident; and current Guidelines for Excise Bonding Warehouse Operations — Goods Subject to Excise Lost through Fire, Accident or Theft. Alternatives There is no reasonable alternative to the making of these Regulations. In order to provide for the relief of duty on alcohol that is lost and to specify the conditions that a person must fulfil in order to qualify for that relief, it is necessary to prescribe the circumstances under which losses will qualify and the conditions that must be met. The Regulations are necessary to implement the provisions of the new Act and they will formalize the current practice with respect to losses. Benefits and Costs These Regulations provide relief from duty on alcohol that is lost under circumstances that are beyond the control of the person who is responsible for the duty on the alcohol. Without these Regulations, such persons would be required to remit duty on alcohol lost in production and that is never entered into consumption or taken for use in any other way. Accordingly, these Regulations protect spirits licensees, excise warehouse licensees, and licensed users from losses of alcohol outside their control. These Regulations also provide a degree of continuity with the current regulations and guidelines under which licence holders operate. With similar provisions under the Excise Act, 2001 and its regulations there will be a no disruption or impact on the manufacturing processes or record-keeping requirements of the licence holder. There will be no increased costs to the CCRA as a result of these Regulations. Consultation The CCRA and the Department of Finance carried out extensive consultations with the affected industries. Draft regulations were released in December 2001, and a notice distributed in April 2002 to all current and potential licence and registration holders drawing their attention to the draft regulations and asking for submissions by June 30, 2002. Personal presentations and meetings were held with industry groups expressing interest, and their comments and suggestions were actively sought and taken into consideration. During consultations with provincial liquor authorities, Spirits Canada, the Canadian Vintners Association, the British Columbia Wine Institute, or the Wine Council of Ontario, there were no comments received with respect to these Regulations. No written submissions from any other affected groups were received with respect to these Regulations. Compliance and Enforcement The CCRA is responsible for enforcing these Regulations as a part of the standard audit and compliance programs. Licensees will be required to provide acceptable documentation to support any losses claimed. Excise duty is payable on alcohol that cannot be accounted for as being in a person's possession or as being used in an authorized manner. The failure by a licensee to adequately account for alcohol lost while in their possession would result in an assessment being made on the amount of spirits lost. This would be determined through regular, scheduled audits of the licence holder. Mr. Mark Hartigan, Manager, Excise Act, 2001 — Implementation, Excise Duties and Taxes Division, Excise and GST/HST Rulings Directorate, Policy and Legislation Branch, Place de Ville, 20th Floor, 320 Queen Street, Ottawa, Ontario K1A 0L5, (613) 954-5894 (Telephone), (613) 954-2226 (Facsimile). Notice is hereby given that the Governor in Council, pursuant to paragraph 304(1)(o) of the Excise Act, 2001 (see footnote b) , proposes to make the annexed Losses of Bulk Spirits and Packaged Alcohol Regulations. Interested persons may make representations with respect to the proposed Regulations within 30 days after the date of publication of this notice. All such representations must cite the Canada Gazette, Part I, and the date of publication of this notice, and be addressed to Mr. Mark Hartigan, Policy and Legislation Branch, Canada Customs and Revenue Agency, 20th Floor, Tower A, Place de Ville, 320 Queen Street, Ottawa, Ontario K1A 0L5. Persons making representations should identify any of those representations the disclosure of which should be refused under the Access to Information Act, in particular under sections 19 and 20 of that Act, and should indicate the reasons why and the period during which the representations should not be disclosed. They should also identify any representations for which there is consent to disclosure for the purposes of that Act. Ottawa, March 20, 2003 EILEEN BOYD Assistant Clerk of the Privy Council LOSSES OF BULK SPIRITS AND PACKAGED ALCOHOL REGULATIONS INTERPRETATION 1. The definitions in this section apply in these Regulations. "Act" means the Excise Act, 2001. (Loi) "licensee" means a spirits licensee or a licensed user. (titulaire de licence) LOSS OF BULK SPIRITS 2. For the purposes of paragraph 109(f) of the Act, bulk spirits are lost when they are lost in any of the following circumstances, on condition that the person responsible for the spirits at the time of the loss keeps records, in accordance with section 206 of the Act, that substantiate the loss: (a) a fire; (b) shrinkage by evaporation; (c) processes relating to manufacturing, including aging, blending, racking, re-distilling, reducing and vatting; (d) processes relating to handling, including stock operations and packaging; and (e) the physical transfer of the spirits between licensees or between a licensee and an alcohol registrant. LOSS OF PACKAGED ALCOHOL 3. For the purposes of paragraphs 129(1)(c) and 138(1)(c) of the Act, packaged alcohol is lost when it is lost through breakage that occurs (a) while the alcohol is in its original unopened container in an excise warehouse or in the specified premises of a licensed user, on condition that the excise warehouse licensee or the licensed user in possession of the alcohol at the time of the breakage keeps records, in accordance with section 206 of the Act, that substantiate the breakage; or (b) during the physical transfer of the alcohol between excise warehouses or between an excise warehouse and the specified premises of a licensed user. COMING INTO FORCE 4. These Regulations take effect on July 1, 2003. [12-1-o] Regulations Relieving Special Duty on Certain Tobacco ProductsStatutory Authority Excise Act, 2001 Sponsoring Agency Canada Customs and Revenue Agency REGULATORY IMPACT ANALYSIS STATEMENT Description The Regulations Relieving Special Duty on Certain Tobacco Products (the "Regulations") replace the Export Tax Exemption Regulations (Tobacco Products), made under the provisions of the Excise Tax Act (ETA). These new Regulations give effect to the provisions of paragraphs 58(1)(a) and 58(2)(a) of the Excise Act, 2001 (the "Act"), which allow certain tobacco products and cigarettes to be prescribed for purposes of potentially allowing them full exemption from the application of the special duty provisions of the Act. The legislative criteria applicable to the relief from special duty for prescribed tobacco products and prescribed cigarettes, as set out under section 58 of the Act, are the same as the current criteria under section 23.3 of the ETA that apply to the exemption from the excise tax on exported Canadian manufactured tobacco. For the exemption to apply, only very minimal amounts of the production of a prescribed tobacco product brand may be sold on the Canadian market during the years preceding the year of first exportation. For the prescribed cigarettes, no cigarettes of that particular type or formulation may ever be sold in Canada before or after the time when they are first exported. Under section 56 of the Act, special duty is imposed on certain exports of tobacco products destined for sale in foreign "duty paid" markets. The special duty is relieved for Canadian-made prescribed tobacco products and prescribed cigarettes that also meet the detailed criteria set out under the provisions of paragraphs 58(1)(b) and (c) and 58(2)(b) of the Act. There are two types of products that may be prescribed under paragraphs 58(1)(a) and 58(2)(a) of the Act. A tobacco product may be a cigarette, tobacco stick, or other manufactured tobacco product. A cigarette, however, must meet the definition of "cigarette" in section 2 of the Act. The prescribed tobacco products and prescribed cigarettes that are named in these Regulations are also named in the Regulations Respecting the Stamping and Marking of Tobacco Products, thereby potentially qualifying them for an exemption from the normal marking provisions, if they otherwise meet the legislative criterion under subsection 38(3) of the Act that they not be commonly sold in Canada. The majority of the tobacco brands listed in Schedule 1 to these Regulations have been added to the list of prescribed brands in response to requests made by Canadian manufacturers since a draft of the Regulations was first published in December 2001. One brand, Al-Shalal Canadian Tobacco Leaves, has been deleted. Alternatives There is no reasonable alternative to the making of these Regulations. In order for the exemptions from the current excise tax on tobacco exports to continue as special duty relief under this Act, these tobacco products must be prescribed. Benefits and Costs These Regulations will enable those companies that have been making or wish to make prescribed tobacco products or prescribed cigarettes to continue with their business plans and supply the needs of foreign customers. There will be no new costs assumed by Canadian tobacco manufacturers or by the Canada Customs and Revenue Agency (CCRA). Consultation The CCRA and the Department of Finance carried out extensive consultations with Canadian tobacco manufacturers, as well as other interested parties, after the Regulations were released for general distribution in December 2001. Tobacco manufacturers provided some verbal comments to indicate their support for the continuation of the prescribed tobacco product and prescribed cigarette provisions, and in some cases made requests for additions to the lists of prescribed tobacco brands. Compliance and Enforcement The CCRA is responsible for enforcing these Regulations at the manufacturer/exporter level, while the Royal Canadian Mounted Police (RCMP) is responsible for direct enforcement of these provisions if any of the prescribed tobacco products that are actually made for the export markets should appear in the Canadian market in more than minimal quantities. For the prescribed cigarettes, the formulations would have to be analysed by the CCRA's Laboratory and Scientific Services Directorate to compare the formulations for the foreign markets with those made for the Canadian market. Any prescribed tobacco product or prescribed cigarette that does not also meet the criteria set out in the legislation would be ineligible for the special duty relief. The CCRA auditors will be responsible for ensuring that the criteria are met, and for assessing the special duty on those exported prescribed tobacco products and prescribed cigarettes that fail to meet those provisions. Mr. Steve Mosher, Senior Legislative Officer, Excise Duties and Taxes Division, Excise and GST/HST Rulings Directorate, Policy and Legislation Branch, Place de Ville, 20th Floor, 320 Queen Street, Ottawa, Ontario K1A 0L5, (613) 941-1497 (Telephone), (613) 954-2226 (Facsimile). Notice is hereby given that the Governor in Council, pursuant to paragraph 304(1)(o) of the Excise Act, 2001 (see footnote c) , proposes to make the annexed Regulations Relieving Special Duty on Certain Tobacco Products. Interested persons may make representations with respect to the proposed Regulations within 30 days after the date of publication of this notice. All such representations must cite the Canada Gazette, Part I, and the date of publication of this notice, and be addressed to Mr. Mark Hartigan, Policy and Legislation Branch, Canada Customs and Revenue Agency, 20th Floor, Tower A, Place de Ville, 320 Queen Street, Ottawa, Ontario K1A 0L5. Persons making representations should identify any of those representations the disclosure of which should be refused under the Access to Information Act, in particular under sections 19 and 20 of that Act, and should indicate the reasons why and the period during which the representations should not be disclosed. They should also identify any representations for which there is consent to disclosure for the purposes of that Act. Ottawa, March 20, 2003 EILEEN BOYD Assistant Clerk of the Privy Council REGULATIONS RELIEVING SPECIAL DUTY ON CERTAIN TOBACCO PRODUCTS DEFINITION 1. In these Regulations, "Act" means the Excise Act, 2001. RELIEF 2. For the purposes of paragraph 58(1)(a) of the Act, a tobacco product of a brand set out in Schedule 1 is a prescribed tobacco product. 3. For the purposes of paragraph 58(2)(a) of the Act, a cigarette exported under a brand set out in Schedule 2 is a prescribed cigarette. COMING INTO FORCE 4. These Regulations take effect on July 1, 2003. SCHEDULE 1 (Section 2) TOBACCO PRODUCTS
SCHEDULE 1 — Continued TOBACCO PRODUCTS — Continued
SCHEDULE 1 — Continued TOBACCO PRODUCTS — Continued
SCHEDULE 1 — Continued TOBACCO PRODUCTS — Continued
SCHEDULE 2 (Section 3) CIGARETTES
[12-1-o] Regulations Respecting the Fees for the Examination of Instruments and the Provision of TablesStatutory Authority Excise Act, 2001 Sponsoring Agency Canada Customs and Revenue Agency REGULATORY IMPACT ANALYSIS STATEMENT Description The new Excise Act, 2001 (the "Act") received Royal Assent on June 13, 2002, thereby replacing the legislative provisions of the existing Excise Act regarding the production and distribution of alcohol and tobacco products. The Act authorizes the Governor in Council to make identified related regulations in support of the new legislation. Accordingly, the Regulations Respecting the Fees for the Examination of Instruments and the Provision of Tables have been written to set out the fees to be paid to the Canada Customs and Revenue Agency (CCRA) for the examination and certification of instruments to be used in the determination of alcohol content for the purpose of calculating the amount of duty to be imposed. Subsection 148(1) of the Act requires that the absolute ethyl alcohol content of alcohol be determined in a manner specified by the Minister using approved instruments. Paragraph 304(1)(j) of the Act allows for a prescribed fee to be charged for the examination of these instruments. The fee for the examination of instruments is set at $25. There are also three books of tables to be used with specified analytical instruments, which are sold at the following cost: Canadian Alcoholometric Tables, 1980 — $50 Canadian Alcoholometric Laboratory Table, 1996 — $15 Canadian Alcoholometric Obscuration Equivalent Tables, 1993 — $15 A set of these three publications is provided free of charge to each alcohol licensee and licensed user at the time the licence is issued. The fees charged are not based on cost recovery but do offset some of the administrative costs incurred by the CCRA; the actual cost would be prohibitive to many small wineries. The fees remain unchanged from the existing rates for the same instrument analysis and the three publications currently set out in the Departmental Alcohol Determination Regulations, 1997, which will be revoked. Alternatives There is no reasonable alternative to the making of these Regulations. These Regulations specifically set out the fees for the examination of instruments and the accompanying books of tables to be used in the determination of alcohol content, and mirror the current regulations. Benefits and Costs There are no increased costs as a result of these Regulations. Licence holders are currently charged these fees for the related services, and the rates are not being changed. The initial set of books of tables will continue to be provided free of charge. The fee also serves a dual purpose: to benefit small wine producers who would find the actual cost prohibitive, and to discourage frivolous use of the examination process and unnecessary requests for the publications. The CCRA benefits from having the licence holder use approved instruments, which ensure that alcohol content is accurately determined and that the correct amount of duty is imposed on alcohol. Consultation The CCRA and the Department of Finance carried out extensive consultations with the affected industries. Draft regulations were released in December 2001, and a notice was distributed in April 2002 to all current and potential licence and registration holders, drawing their attention to the draft regulations and asking for submissions by June 30, 2002. Personal presentations and meetings were held with industry groups expressing interest, and their comments and suggestions were actively sought and taken into consideration. There were no comments received with respect to these Regulations. Compliance and Enforcement Compliance with these Regulations will be monitored by CCRA auditors on a post-review basis to ensure that, if the licensee has had instruments examined or re-examined or has purchased any books of tables, the appropriate fee has been paid to the CCRA. Mr. Mark Hartigan, Manager, Excise Act, 2001 — Implementation, Excise Duties and Taxes Division, Excise and GST/HST Rulings Directorate, Policy and Legislation Branch, Place de Ville, 20th Floor, 320 Queen Street, Ottawa, Ontario K1A 0L5, (613) 954-9854 (Telephone), (613) 954-2226 (Facsimile). Notice is hereby given that the Governor in Council, pursuant to paragraph 304(1)(j) of the Excise Act, 2001 (see footnote d) , proposes to make the annexed Regulations Respecting the Fees for the Examination of Instruments and the Provision of Tables. Interested persons may make representations with respect to the proposed Regulations within 30 days after the date of publication of this notice. All such representations must cite the Canada Gazette, Part I, and the date of publication of this notice, and be addressed to Mr. Mark Hartigan, Policy and Legislation Branch, Canada Customs and Revenue Agency, 20th Floor, Tower A, Place de Ville, 320 Queen Street, Ottawa, Ontario K1A 0L5. Persons making representations should identify any of those representations, the disclosure of which should be refused under the Access to Information Act, in particular under sections 19 and 20 of that Act, and should indicate the reasons why and the period during which the representations should not be disclosed. They should also identify any representations for which there is consent to disclosure for the purposes of that Act. Ottawa, March 20, 2003 EILEEN BOYD Assistant Clerk of the Privy Council REGULATIONS RESPECTING THE FEES FOR THE EXAMINATION OF INSTRUMENTS AND THE PROVISION OF TABLES FEES 1. The fee to be paid for the examination of an instrument under subsection 148(2) of the Excise Act, 2001 is $25. 2. The fee for each copy of the tables set out in column 1 of the chart to this section is set out in column 2 of the chart. No fee is payable for copies of tables provided to an alcohol licensee or licensed user at the time their licence is issued. CHART
COMING INTO FORCE 3. These Regulations take effect on July 1, 2003. [12-1-o] S.C. 2002, c. 22 S.C. 2002, c. 22 S.C. 2002, c. 22 S.C. 2002, c. 22 |
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