Get an Excise Warehouse Licence in Canada

Purpose Of An Excise Warehouse Licence

An excise warehouse licence is a permit issued by the Canada Revenue Agency (CRA) that allows a business to store certain goods before excise duty has been paid on them. Think of it as a designated area where products like packaged alcohol or unstamped tobacco can be held. This licence is primarily for businesses that are not retailers of alcohol but need to possess these goods. It’s a key component for managing excise duty obligations, allowing for the deferral of payments until the goods are ready for sale or removal from the warehouse to the duty-paid market.

Authorization For Possession Of Goods

This licence specifically authorizes the holder to possess non-duty-paid packaged alcohol or unstamped manufactured tobacco and cigars within their approved excise warehouse. For alcohol, this means you can store packaged alcohol that hasn’t had excise duty applied yet. For tobacco, it covers unstamped manufactured tobacco and cigars. This authorization is distinct from simply selling these items; it’s about the legal storage of goods before the relevant duties are settled.

Distinction From Other Licences

It’s important to understand that an excise warehouse licence is not the same as a retail sales licence or a manufacturing licence. While a business might hold multiple licences, the excise warehouse licence is specifically about the storage of goods in a duty-suspended state. For instance, a tobacco manufacturer might need a tobacco licence to produce tobacco, but they would also require an excise warehouse licence to store unstamped tobacco before it’s packaged and duty is paid. Similarly, an alcohol producer might need a spirits or wine licence, but the excise warehouse licence allows them to store packaged alcohol before duty is levied upon its removal for sale.

Eligibility Criteria For An Excise Warehouse Licence

Requirements For Non-Retail Alcohol Sellers

To get an excise warehouse licence, if you’re not selling alcohol directly to the public, you generally need to be authorized to hold non-duty-paid packaged alcohol or unstamped tobacco products. This licence allows you to store these goods before the excise duty is paid. It’s a key step for businesses involved in the supply chain who need to manage inventory before it enters the duty-paid market. You’ll need to apply through the appropriate channels, and the Canada Revenue Agency (CRA) will review your application to make sure you meet all the necessary conditions.

Conditions For Alcohol Retailers

If you’re already an alcohol retailer, you might also be eligible for an excise warehouse licence. However, there are specific conditions. You must typically hold a spirits or wine licence, or be a provincial liquor authority. Alternatively, if you supply goods as ships’ stores according to the Ships’ Stores Regulations, you may also qualify. This allows retailers to manage their stock more effectively and potentially defer duty payments. It’s important to check if your specific business activities align with these requirements.

Eligibility For Tobacco Licensees

Tobacco licensees have their own set of criteria. If you’re a tobacco licensee and wish to store unstamped manufactured tobacco or cigars, you’ll need a separate excise warehouse licence specifically for this purpose. This licence authorizes you to possess these unstamped products. If you’re not a tobacco licensee but want to hold unstamped tobacco or cigars, you can still get a licence, but you’ll be limited to possessing imported products or Canadian-manufactured cigars intended for ships’ stores. This ensures proper control over tobacco products before duty is levied.

Specific Provincial Authorizations

In some cases, particularly if you’re warehousing non-duty-paid packaged alcohol and you’re not producing or packaging it within that province, you’ll need more than just the federal licence. You must provide proof from the provincial liquor authority in each province where you plan to operate a warehouse. This shows you have their authorization to warehouse alcohol on those specific premises. This requirement highlights the need to comply with both federal and provincial regulations when handling alcohol. For more details on licensing, you can refer to Excise Duty Memorandum EDM2-2-1, which outlines the process for obtaining and renewing licences.

The Application Process For An Excise Warehouse Licence

Required Application Forms

To begin the process of obtaining an excise warehouse licence, you’ll need to complete the appropriate application form. For a standard excise warehouse licence, Form L63W, Application for an Excise Warehouse Licence or a Special Excise Warehouse Licence, is the document you’ll need. It’s important to fill this out accurately and completely. This form is available from the Canada Revenue Agency (CRA). Make sure you have the latest version, as requirements can change.

Submission To Regional Offices

Once your application form is completed, it needs to be submitted to the correct Canada Revenue Agency (CRA) regional excise office. The specific office will depend on your business location. It’s a good idea to check the CRA website or contact them directly to confirm which regional office is responsible for your area. Sending it to the wrong office could cause unnecessary delays in processing your application.

Designation Of Premises

Part of the application process involves specifying the exact location where the excise warehouse will operate. The premises must be suitable for storing non-duty-paid goods, whether that’s packaged alcohol or unstamped tobacco products. If you plan to warehouse packaged alcohol and are not a producer or packager in that province, you’ll need to provide proof of authorization from the provincial liquor authority. This demonstrates that your proposed warehouse meets all the necessary provincial requirements as well as federal ones. The designation of suitable premises is a critical step.

Key Obligations Of An Excise Warehouse Licensee

Responsibility For Excise Duty

As an excise warehouse licensee, you take on significant responsibility for excise duty. When non-duty-paid packaged alcohol or unstamped tobacco products are brought into your licensed warehouse, you become liable for the excise duty that would otherwise be payable. This means you are accountable for the duty on these goods from the moment they enter your premises until they are properly accounted for, whether that’s through payment of duty, removal for export, or transfer to another licensed entity.

Maintaining Accurate Records

Keeping meticulous records is not just good practice; it’s a legal requirement. You must maintain detailed and accurate records of all goods entering and leaving your excise warehouse. This includes:

Quantities and types of alcohol or tobacco products.
Dates of receipt and removal.
Names and licence numbers of suppliers and recipients.
Details of any duty paid or deferred.

These records are subject to inspection by the Canada Revenue Agency (CRA) at any time. Failure to maintain adequate records can lead to penalties and difficulties in proving compliance.

Reporting Requirements

Regular reporting to the CRA is another critical obligation. You will need to submit periodic returns detailing the movement of goods within your warehouse and any removals. These reports are essential for the CRA to track excise duty liabilities and ensure compliance with the Excise Act, 2001. The frequency and specific format of these reports will be communicated to you upon licensing.

The timely and accurate submission of all required documentation and payments is paramount to maintaining your excise warehouse licence and avoiding penalties. It demonstrates your commitment to operating within the regulatory framework established by the Canada Revenue Agency.

Possession And Storage Of Goods

Authorised Goods For Warehousing

An excise warehouse licence permits the holder to store specific goods on which excise duty has not yet been paid. These authorised goods primarily include packaged alcohol and unstamped manufactured tobacco or cigars. The premises designated under your licence are considered a distinct area for the storage and accounting of these dutiable products. There isn’t a strict size limit for an excise warehouse, and you can have multiple locations as long as they comply with the relevant legislation. It’s important to remember that the goods must be properly accounted for while they remain within the warehouse, as excise duty is deferred during this period.

Release Of Imported Goods

For imported non-duty-paid packaged alcohol, storage within an excise warehouse is only permitted after the goods have been officially released by the Canada Border Services Agency (CBSA). This step is critical before the alcohol can be moved into your licensed premises. Similarly, unstamped imported manufactured tobacco and cigars can be stored, but specific conditions apply, particularly if you are not also a licensed tobacco producer.

Liability Upon Entry Into Warehouse

Once non-duty-paid packaged alcohol, whether domestically produced or imported, is brought into your excise warehouse, you, as the licensee, become liable for the excise duty. This liability is established at the point the goods enter the warehouse. This is a key aspect of the duty deferral system, where the responsibility for payment shifts to the warehouse licensee until the goods are eventually removed for sale in the duty-paid market. This transfer of liability underscores the importance of meticulous record-keeping and inventory management.

Packaged Alcohol: You are authorized to possess non-duty-paid packaged alcohol that has been packaged by another alcohol licensee or imported by yourself.
Tobacco Products: If you hold a tobacco licence, you can store unstamped manufactured tobacco or cigars of your own production. If you do not hold a tobacco licence, you can still store unstamped imported manufactured tobacco and cigars, and unstamped cigars manufactured in Canada, provided certain conditions are met, such as certifying they are for ships’ stores.
Imported Goods: All imported goods must clear customs and be released by the CBSA before they can be stored in your excise warehouse.

Deferral Of Excise Duty Payments

Duty Deferral For Packaged Alcohol

An excise warehouse licence provides a significant benefit: the deferral of excise duty payments. This means that you, as the licensee, do not have to pay the excise duty on certain goods until they are removed from your licensed warehouse. For packaged alcohol, this deferral applies when the goods are stored within the approved premises. The duty becomes payable only at the point of removal, typically when the alcohol is entered into the duty-paid market or otherwise leaves the controlled environment of the warehouse. This mechanism helps manage cash flow for businesses dealing with excise goods.

Imported Packaged Alcohol Deferral

Similar provisions for duty deferral extend to imported packaged alcohol. When such goods are brought into Canada and placed in an excise warehouse, the payment of excise duty, including any special duty applicable to imported spirits, is postponed. The liability for these duties is suspended while the goods remain under excise control within the warehouse. Duty is then levied and becomes payable when the imported alcohol is removed from the warehouse for consumption or sale within Canada. This aligns the tax treatment with domestically produced goods.

Payment Upon Removal From Warehouse

The core principle of the excise warehouse system is that duty is paid upon removal. For packaged alcohol, this generally occurs when it is taken out of the warehouse to be sold in the duty-paid market. However, there are exceptions. If the alcohol is being moved to another excise warehouse, a licensed user, an accredited representative for personal use, a duty-free shop, a registered user, or as ships’ stores, excise duty may not be payable at that point, as per the Excise Act, 2001. The specific conditions for removal without immediate duty payment are detailed in the relevant sections of the Act and its regulations. It is vital to maintain accurate records to demonstrate that goods were removed under a duty-free provision, if applicable.

Licence Duration And Renewal

Maximum Licence Validity Period

An excise warehouse licence isn’t a lifetime pass; it has a set expiry date. Generally, these licences are valid for a maximum of two years from the date they become effective. This period is clearly stated on the licence approval notice. It’s important to note that this two-year maximum applies to most licences, though some specific licences under the Excise Act, 2001, like cannabis licences (five years) or vaping product licences (three years), have different maximum durations. Always check your specific licence for its exact validity period.

Timely Renewal Procedures

To keep your operations running smoothly without interruption, renewing your excise warehouse licence before it expires is key. You’ll need to submit a completed renewal application form to your regional excise office. This form should be submitted at least 30 days before your current licence runs out. The specific form you need will depend on the type of goods you are warehousing (e.g., Form L63A, L63T, or L63W for alcohol-related goods). Make sure to clearly indicate on the form that you are applying for a renewal.

Conditions For Licence Renewal

Renewing your licence isn’t automatic, even if you submit the paperwork on time. The Canada Revenue Agency (CRA) will review your application. A licence will typically be renewed if you’ve submitted your renewal application within the specified timeframe and, importantly, if the CRA is satisfied that there are no grounds to cancel or suspend your existing licence. This means you must have maintained compliance with all the terms of your licence and the Excise Act, 2001, throughout its duration. Failure to meet these conditions could result in your renewal being denied.

Changes Affecting Your Licence

Mandatory Notification Of Changes

It is a requirement for all excise warehouse licensees to inform their regional excise office of any changes to their business or licensing information. This notification must be made in writing and without delay. Failing to report these changes can lead to serious consequences, including licence suspension or cancellation.

Changes that require immediate notification include:

A change in the business name or legal entity.
The cessation of operations covered by the licence.
Alterations to the list of approved premises.
Any modification to the activities conducted under the licence.
Updates to information previously provided on the licence application, such as changes to officers or directors.
A change in the address where business records are maintained.

For instance, if your business undergoes a name change, you must notify the relevant excise office before the change takes effect, or as soon as possible thereafter. It’s important to note that a new licence or excise duty program account number will not be issued in such cases. However, if there’s a change in the legal entity (e.g., a sole proprietorship becoming a corporation), the existing licence will be cancelled, and the new entity must apply for a fresh licence. This often involves submitting updated forms and potentially new security. Learn about excise duty program responsibilities.

Consequences Of Non-Compliance

Non-compliance with the notification requirements can have significant repercussions. The Canada Revenue Agency (CRA) may suspend a licence if a licensee fails to report changes as required or if they no longer meet the conditions of the licence. Suspension means your ability to operate under the licence is temporarily halted. The CRA will issue a written notice detailing the suspension and the reasons behind it. Following a suspension, you have a period of 90 days to provide information or make representations to the CRA explaining why the licence should be reinstated. If the CRA is satisfied that the grounds for suspension no longer exist, the licence can be reinstated.

In more severe cases, or if the issues leading to suspension are not rectified, the CRA may proceed with the cancellation of the licence. Before cancellation (unless it’s at the licensee’s request), the CRA will provide 90 days’ notice of the proposed action, along with the grounds for it. Similar to suspension, licensees have 90 days to make representations against the proposed cancellation. Grounds for cancellation can include bankruptcy, no longer meeting eligibility requirements, ceasing business operations, or failing to comply with relevant legislation. It is vital to maintain accurate records and adhere strictly to all licence conditions to avoid such outcomes.

Special Provisions And Exceptions

Authorization For Remote Stores

In certain circumstances, the Canada Revenue Agency (CRA) may grant special authorizations for excise warehouse licensees operating in remote locations. These provisions acknowledge the unique logistical challenges faced by businesses in areas with limited access to standard transportation networks. Such authorizations might permit alternative storage arrangements or modified reporting schedules, provided that the integrity of excise duty collection is maintained. It is imperative for licensees to formally apply for these exceptions, clearly outlining the reasons for the request and demonstrating how compliance with excise laws will still be achieved.

Exceeding Supply Thresholds

While excise warehouse licences typically define the scope of operations, there are instances where a licensee might need to exceed certain supply thresholds. This could occur due to unexpected surges in demand or specific contractual obligations. The Act allows for temporary deviations under strict conditions, often requiring prior approval from the CRA. Failure to obtain such approval before exceeding limits can lead to significant penalties. For packaged alcohol, exceeding the 100-litre capacity limit for ordinary consumer sale without a marked special container, for example, would require specific authorization.

Revocation Of Special Authorisations

Special authorisations granted to excise warehouse licensees are not permanent and are subject to review. The CRA reserves the right to revoke these exceptions if the licensee fails to adhere to the stipulated conditions, if the circumstances justifying the special provision no longer apply, or if there are concerns regarding compliance with excise legislation. A revocation means the licensee must revert to standard operating procedures and may face penalties if they continue to operate under the revoked authorisation. It is vital to maintain meticulous records and communication with the CRA to avoid such outcomes. For instance, a special authorisation for a remote store could be revoked if the licensee is found to be non-compliant with inventory tracking requirements, impacting the ability to verify duty payment on goods.

Enforcement And Compliance

Staying on the right side of the law is pretty important when you’re running an excise warehouse. The Canada Revenue Agency (CRA) has a few ways it keeps tabs on things to make sure everyone’s playing fair.

Penalties For Non-Compliance

If you don’t follow the rules laid out in the Excise Act, 2001, you could be looking at penalties. These aren’t just minor slaps on the wrist; they can add up. The specific amount often depends on the severity and nature of the violation. It’s always best to check the latest guidelines from the CRA, but generally, failing to file returns on time, not paying duties when you should, or not keeping proper records can all trigger these penalties.

Potential Legal Charges

Beyond just financial penalties, serious or repeated non-compliance can lead to more significant legal trouble. This could involve charges under the Excise Act, 2001. The CRA takes a dim view of activities that could be seen as defrauding the Crown or deliberately evading duties. It’s vital to understand that your licence is a privilege, not a right, and serious breaches can jeopardize your ability to operate.

Grounds For Licence Suspension

The CRA has the authority to suspend or even cancel your excise warehouse licence. This isn’t done lightly, but there are clear reasons why it might happen. Common grounds include:

Failing to inform the CRA about changes to your business details (like address or ownership).
Not maintaining adequate facilities, staff, or equipment for your operations.
Not meeting the specific conditions attached to your licence.
Becoming bankrupt or being subject to receivership.
Failing to comply with other relevant tax or trade legislation, not just the Excise Act, 2001.

Maintaining accurate records and submitting all required returns and payments on time are fundamental to keeping your licence in good standing. Proactive communication with the CRA about any potential issues can often prevent more serious consequences.

Frequently Asked Questions

What exactly is an excise warehouse licence for?

Think of an excise warehouse licence as a special permission slip from the Canada Revenue Agency (CRA). It allows businesses to store certain goods, like alcohol or tobacco, that haven’t had their excise duty paid yet. This means businesses can hold onto these items without paying the tax right away, which is really helpful for managing their cash flow. It’s mainly for people who aren’t selling directly to the public but are involved in the supply chain.

Who can get an excise warehouse licence?

Generally, if you’re not selling alcohol directly to customers, you might be able to get this licence. This includes people who make or package alcohol, or those who import tobacco. Even some alcohol sellers can get one if they meet certain conditions, like being a provincial liquor authority or supplying ships’ stores. There are specific rules depending on whether you’re dealing with alcohol or tobacco.

How do I apply for this licence?

Applying involves filling out the correct form, which is usually Form L63W. You’ll need to send this to your regional CRA office. It’s also important to clearly mark the specific places or ‘premises’ where you plan to keep these goods. Make sure all your details are correct before sending it in.

What are the main responsibilities once I have the licence?

Having the licence means you’re responsible for the goods stored in your warehouse. You must keep very accurate records of everything you have and move. You also need to report certain things to the CRA regularly. Basically, you’re trusted to handle these goods correctly and pay the duty when they leave your warehouse.

Can I store any kind of alcohol or tobacco?

You can store alcohol and tobacco that haven’t had excise duty paid on them yet. For imported goods, they need to be released by the border services first. Once these goods enter your warehouse, you become responsible for the excise duty on them, even if you haven’t sold them yet.

Does this licence let me delay paying excise duty?

Yes, that’s a big part of it! By storing packaged alcohol or unstamped tobacco in your licensed warehouse, you can delay paying the excise duty. You only have to pay the duty when you take the goods out of the warehouse to sell them to the public or to another business that will pay the duty.

How long is the licence valid for, and how do I renew it?

Your licence is usually valid for a maximum of two years. To keep it active, you must apply for renewal at least 30 days before it expires by submitting the correct form to your regional CRA office. The CRA will renew it if you’ve followed all the rules and there’s no reason to stop you.

What happens if my business information changes?

It’s really important to tell the CRA about any changes to your business details right away. This could be things like a change in address or ownership. If you don’t report these changes, you could face penalties or even have your licence taken away. Staying compliant is key.