On April 7, 2022, the Federal Government announced an excise duty on vaping products. This excise tax applies to any vaping substances sold in Canada that are intended for use in a vaping device.
All vaping products that are meant for sale in the Canadian duty-paid market are required to have an excise stamp affixed to the product as proof that duties have been paid.
Manufacturers of vaping substances will need to affix these labels to any products created starting October 1 2022. There will be a grace period for retailers to liquidate any non-excise tagged products of 60 days.
Starting January 1 2023, all vaping products will require a vaping excise stamp affixed to the product, and will be subject to applicable taxes.
A simple breakdown of the new taxes are as follows:
For the first 10 mL of vaping substance, a duty is applied at a rate of $1.00 per 2 mL of the vaping substance.
For each additional 10 mL of vaping substance thereafter, a duty is applied at a rate of $1.00 per 10 mL of the vaping substance.
Examples:
For a closed pod pack (3 pods cartridges), the duty payable will be CAD $1 per 2 mL, which equates to an increase of $3 per closed pod pack.
A 60 mL bottle of e-liquid at Federal excise duties would be $1 per 2 mL for the first 10 mL, which equates to $5. The remaining 50 mL would be $1 per 10 mL which equates to another $5. The total Federal excise duties would be $10.
It is important to note that the Government has invited the Provinces and Territories to participate. In the event that the Provinces or Territories opt into the excise tax, a new Provincial/Territorial stamp will need to be applied on all products and the duty payable will effectively double.
Using the example above, the same closed pod pack with 6 mL of vaping substance with Federal and Provincial/Territorial duties would be $2 per 2 mL, which equates to $6. At the time of this writing, no Provinces and Territories have participated yet.
For more information on how the new excise tax works click here
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