March 2019
Effective 17 October 2018, cannabis became legal for recreational consumption throughout Canada. With it came significant challenges related to education, law enforcement, and the application of Excise Duties, Goods & Services Tax/Harmonized Sales Tax (GST/HST), Quebec Sales Tax (QST), and Provincial Sales Taxes (PSTs).
Lawmakers were concerned with ensuring that tax rates applied not cause legal cannabis to be overpriced and drive purchasers to alternative illegal markets. So, the combined federal, provincial, and territorial cannabis-specific duties will not exceed the higher of CA$1/gram or 10% of a producer’s selling price imposed at the production level and paid to the federal government by the producer. Specified provinces also receive a “supplementary duty” that is collected by the federal government and paid to the applicable provincial governments.
GST/HST, QST, and PST (excluding Manitoba PST currently) are applied to the Excise Duty-included value of the cannabis in the province of distribution.
As the cannabis industry continues to grow in Canada, suppliers from around the world are exporting more and more equipment to Canada to meet demand and may incur duties and taxes upon import to Canada. If you require assistance reducing or recovering duties and taxes on goods imported to Canada, please reach out to a member of BDO Canada LLP’s indirect tax team for assistance.
Brian Morcombe
bmorcombe@bdo.ca
Jeremy Scott
jerscott@bdo.ca