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Basic rules for tobacco retail dealers
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This page provides general information for tobacco retail dealers about Ontario's tobacco tax rules and the Tobacco Retailer Inspection Program; it should not be considered as a substitute for the Tobacco Tax Act (TTA) and Regulations.
Tobacco retail dealers must:
- sell legal tobacco products only
- have a valid tobacco retail dealer's permit belonging to the owner of the tobacco product for each location that tobacco products are sold. Download and complete the Application for Tobacco Retail Dealer's Permit if you do not have a valid permit.
- only buy tobacco products from Ontario-registered tobacco wholesalers. Retail dealers can see which wholesalers are registered by getting the current Tobacco Tax Registrant List and subscribe to receive e-alerts about tobacco tax and other topics via the Ministry of Finance website
- keep, at their principal place of business, records and books of account for all tobacco product purchases and sales for seven years
- not sell tobacco products to a person less than 19 years old
- require ID from anyone that appears to be less than 25 years old
- post applicable health warning and age restriction signs
- sell legal packages of cigarettes and fine cut tobacco that are marked with the ON DUTY PAID CANADA DROIT ACQUITTÉ tobacco stamp, as seen below. The ON DUTY PAID CANADA DROIT ACQUITTÉ tobacco stamp has the letters 'ON' and a yellow background colour:
Where provincial and federal taxes have not been applied and where the package does not have the ON DUTY PAID CANADA DROIT ACQUITTÉ tobacco stamp as seen above, the cigarettes are illegal.
Cigarette packages with a peach-coloured federal stamp may be bought for personal consumption:
- on a reserve by First Nation individuals
- by diplomats
- from a duty-free store.
Selling illegal tobacco products:
- is in contravention of the TTA
- supports criminal activity
- creates unfair competition for tax-compliant businesses and results in a loss of revenue to support important programs for Ontarians
- undermines Ontario's Smoke-Free Strategy aimed at reducing smoking rates and protecting kids and youth from the dangers of smoking.
Potential consequences of selling illegal tobacco products:
- significant fines and penalties (e.g., up to eight times the tax and up to $10,000)
- jail time of up to two years
- seizure and loss of tobacco products
- prohibition from selling tobacco products
- prohibition from selling lottery tickets by the Alcohol and Gaming Commission of Ontario.
Tobacco retail dealer's permit
Retail dealers who held a vendor's permit under the Retail Sales Tax Act (RSTA) that was valid on June 30, 2010, are deemed to hold a tobacco retail dealer's permit. However, effective July 1, 2018, all retail dealers in Ontario who held a vendor permit under the RSTA are required to hold a tobacco retail dealer's permit issued under the TTA. The ministry is encouraging such retail dealers to apply for the tobacco retail dealer's permit as soon as practicable to ensure they hold a valid tobacco retail dealer's permit as of July 1, 2018.
Retail dealers who are authorized reserve retailers under Ontario's First Nations Cigarette Allocation System are deemed to hold a tobacco retail dealer's permit. On-reserve retailers who hold an authorization letter from the Ministry of Finance are not required to apply for the tobacco retail dealer's permit.
Tobacco inspections at your retail location:
- Ministry of Finance tobacco inspectors help retail dealers and others understand their obligations and ensure compliance with the TTA
- inspectors wear uniforms and upon arrival at your business location, will identify themselves by showing ministry-issued identification
- inspections are not announced or scheduled in advance, and no warrant is needed for the inspection
- it is an offence to hinder or interfere with the inspection process. Inspectors have the authority to issue an offence notice with a set fine against any retail dealer or business for interfering with the inspection process
- tobacco inspectors follow the Regulator's Code of Practice and must follow service principles and standards which promote a consistent level of service excellence and fairness to all business owners and citizens of Ontario
- a tobacco inspection may take up to several hours to complete
- inspectors will make every effort not to interrupt the retail business
- retail staff may contact retail owners during the inspection, but it will not stop the inspection process
- inspectors have the authority to:
- inspect the entire retail location
- determine the full tobacco inventory
- examine books, records and documents
- seize any illegal tobacco
- issue penalties and/or offence notices if warranted
- the retail dealer will need to provide documents such as tobacco retail dealer's permit, receipts, invoices and shipping documents
- if the retail dealer cannot prove tax was paid on the tobacco products inventory a Preliminary Advice of Assessment stating the proposed penalty will be sent to the retail dealer
- if illegal tobacco is found, the inspector will seize and remove the tobacco products
- retail dealers that have any concerns with a tobacco inspection may call the Ministry of Finance at 1-866-ONT-TAXS (1-866-668-8297).
Temporary prohibition program from selling tobacco
Retail dealers who repeatedly violate the TTA or the Smoke-Free Ontario Act (SFOA) may be subject to prohibitions under the TTA or the SFOA.
Tobacco Tax Act prohibition:
- two or more violations within a five year period may lead to a temporary ban from selling, offering for sale or storing tobacco products in that particular location. Violations include any assessed penalty or conviction of an offence under the TTA
- the prohibition may range up to 180 days, depending on the number and nature of the violations
- a retail dealer under a temporary prohibition:
- cannot sell, offer for sale or store tobacco
- will not get tobacco products from suppliers
- may have their name and store locations published on the Ministry of Finance website
- must post signs in their store to notify the public of the prohibition
- continuing to sell or store tobacco products while your retail location is subject to a temporary prohibition could result in penalties and fines ranging from $5,000 to $50,000
- all tobacco products at that location could also be seized.
Smoke-Free Ontario Act prohibition:
- a notice of prohibition is issued to the owner of a retail location by the Minister of Health and Long-term Care or his/her delegate informing of the prohibition of the sale, storage and delivery of tobacco products (commonly known as an automatic prohibition) for a specified period of time
- will result when there are two or more convictions against same owner for tobacco sales offences committed at the same place within a five year period
- the prohibition may be for six, nine or twelve months, depending on the number of convictions during that five year period
- an amendment to this section which has not yet been proclaimed would allow the automatic prohibition to take effect when there are two convictions against any owner of the business.
Sales offences include:
- sale of tobacco products to a person who is less than 19 years of age
- sale of tobacco to a person who appears to be less than 25 years old without requiring that person to provide ID
- sale of improperly packaged cigarettes and tobacco
- non-compliance with signage requirements
- sale of tobacco through vending machines
- sale or storage of tobacco products while under a prohibition order
- violation of the TTA, related to marking or stamping of packages and possession of unmarked cigarettes.
Payment of a Notice of Assessment
Retail dealers have 30 business days after a Preliminary Advice of Assessment to produce proof that all taxes have been paid and may object to an assessed penalty by filing a Notice of Objection.
When a Notice of Assessment is issued by the Ministry of Finance, payment is due right away. Interest will be charged on any outstanding amount and is applied daily until the assessment is paid in full. You can pay by cheque, payable to the Minister of Finance and mail it to:
Ministry of Finance 33 King Street West PO Box 620 Oshawa ON L1H 8H5
Objecting to a Notice of Assessment
If you disagree with a Notice of Assessment, you can file a Notice of Objection with the Ministry of Finance's Advisory, Objections, Appeals and Services Branch who will review the assessment. A Notice of Objection must be filed within 180 days from the day the Notice of Assessment was mailed. The ministry aims to review Notices of Objection in a timely manner.
You can find Notice of Objection forms at ontario.ca/taxappeals or call the Ministry of Finance at 1-866-ONT-TAXS (1-866-668-8297).
Possible tobacco tax inspection findings and consequences
|All cigarette and fine cut tobacco packages have the Ontario-adapted federal stamp. No temporary prohibition order in effect at location. All tobacco purchased from registered wholesaler and all purchases of tobacco products are supported by documents showing tax was paid.
|Satisfactory compliance report with no consequences.
|Cigarette or fine cut tobacco packages do not have the Ontario-adapted federal stamp.
|Seizure and forfeiture of the unmarked cigarettes and unmarked fine cut tobacco and penalty of three times the tax and:
|No proof that tax was paid on cigars and other tobacco products.
|Seizure and forfeiture of cigars and other tobacco products and penalty of three times the tax and:
|No proof that tax was paid on tobacco product purchased from an unregistered wholesaler.
|If the tobacco product is tobacco other than cigars, a penalty of $500 to $10,000 and three times the tax. If the tobacco product is cigars, a penalty of $500 to $10,000 and 170% of the retail dealer's purchase price for the cigars.
|Repeated violations of any or all of the above findings.
|Conditions and limitations imposed on the retail dealer. Temporary prohibition for up to 180 days depending on number of violations.
|Temporary prohibition in effect at location and tobacco found at the location.
|Seizure and of entire tobacco inventory and penalty ranging from $5,000 to $10,000.
In addition to the consequences listed above, retail dealers who violate the TTA could:
- face significant fines, and/or
- be imprisoned for up to two years.
Also, a retail dealer could be prohibited, by the Alcohol and Gaming Commission of Ontario, from selling lottery tickets.
Request an interpretation
To obtain an interpretation on a specific situation not addressed, please send your request by:
- email: Advisory Services
- mail: Ministry of Finance, Advisory Services, 33 King Street West, 3rd Floor, Oshawa ON L1H 8H5
For more information
Visit ontario.ca/tobaccotax or contact the Ministry of Finance at 1-866-ONT-TAXS (1-866-668-8297) or 1-800-263-7776 for teletypewriter (TTY).
Visit Ontario Ministry of Health and Long-Term Care for information on the SFOA or contact the ministry at 1-800-268-1153 or 1-800-387-5559 for teletypewriter (TTY).
Visit Alcohol and Gaming Commission of Ontario for more information about lottery suspensions or contact the commission at 1-800-522-2876.