Beer tax
Learn about the beer basic tax and what purchases are subject to this tax.
The information on this page does not replace the law found in the Liquor Tax Act, 1996, and related regulations.
For information about wine tax, visit the wine tax page. For information about spirits tax, visit the spirits tax page.
Information
Brewery sales to licensees transitioning to LCBO wholesale mark-up channels on April 1, 2026
Beginning April 1, 2026, the LCBO became the exclusive wholesaler of beer to holders of a liquor consumption premises licence (e.g. bars and restaurants). Amendments to sections 35, 106, and 136 of the Licensing regulation (O. Reg. 746/21) under the Liquor Licence and Control Act, 2019, revoked a brewers' authority to sell beer to holders of a liquor consumption premises licence under their brewery licence or through The Beer Store. All domestic brewers that currently sell directly to bars and restaurants or LCOs must be authorized under LCBO's Direct Delivery Program or listed on wholesale.lcbo.com. Learn more at Doing Business with LCBO.
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The 2026 Ontario Budget, A Plan to Protect Ontario, amended the Liquor Tax Act, 1996 to combine the beer basic, volume and environmental taxes into a single beer basic tax.
Alcohol manufacturers may refer to this notice to understand how the changes apply to them.
Effective April 1, 2026, beer basic tax is included in the price a consumer pays for:
- beer made by an Ontario beer manufacturer (microbrewer or non-microbrewer) purchased from:
- on‑site retail stores of the beer manufacturer, and
- Brewers Retail Inc. (i.e., The Beer Store retail stores)
- draft beer made and purchased at a licensed brew pub
Prior to April 1, 2026, the beer tax (which included the basic, volume and environmental taxes) was included in the price paid for beer purchased by a consumer at:
- licensed establishments, such as restaurants and bars
- southern LCBO Convenience Outlets
Beer basic tax does not apply if you:
- make your own beer,
- purchase from the Liquor Control Board of Ontario (LCBO), a grocery store or convenience store, or
- purchase from a licensee (e.g., bar, restaurant).
Beer basic tax
The beer basic tax is calculated based on the volume of beer purchased.
The tax rate depends on:
- the type of beer (draft beer, such as beer sold from a keg 18 litres or larger, or non‑draft beer, such as bottled beer), and
- who made the beer (microbrewer, non-microbrewer or brew pub).
Beer basic tax rates - Effective April 1, 2026 to February 28, 2027
| Beer made by Ontario beer manufacturers (non-microbrewer): Draft beer | Beer made by Ontario beer manufacturers (non-microbrewer): Non‑draft beer | Beer made by Ontario microbrewers: Draft beer | Beer made by Ontario microbrewers: Non‑draft beer | Beer made and purchased at Ontario brew pubs: Draft beer |
|---|---|---|---|---|
| $0.90/L | $1.18/L | $0.36/L | $0.46/L | $0.3341/L |
Adjustments to beer basic tax rates
Beer basic tax rates are adjusted annually based on the Consumer Price Index for Ontario over the past three years. The adjustment scheduled for March 2, 2026 has been delayed. The next scheduled adjustment will take place on March 1, 2027, and on March 1 every year after that.
Microbrewers
At the end of each production year (calendar year), the Ministry of Finance determines whether a brewer has met all the required criteria to qualify as a microbrewer in the upcoming sales year (commencing in March). If you qualify as a microbrewer for a sales year, the beer you sell is subject to the lower beer basic tax rates.
Sales year
A sales year is a period of twelve months that runs from March 1 to the end of the following February unless:
- March 1 is a Saturday or Sunday, in which case the sales year begins on the Monday.
- The last day of February is a Friday or Saturday, in which case the sales year ends on the Sunday.
Production year
A production year in relation to a sales year is the calendar year immediately before the beginning of the sales year. For example, for the sales year from March 2, 2026 to February 28, 2027, the relevant production year is January 1, 2025 to December 31, 2025.
Qualification criteria
To qualify as a microbrewer, in a sales year, certain criteria must be met.
- For a sales year beginning on or after March 2, 2026:
- the brewer’s worldwide production of beer in the preceding production year was not more than 49,000 hectolitres, or
- the brewer’s average annual worldwide production of beer, based on the last five production years (excluding any production years in which the brewer’s worldwide production was zero), was not more than 49,000 hectolitres, or
- if this is the first production year in which it manufactures beer, its worldwide production of beer for the production year is expected to be not more than 49,000 hectolitres.
- In the preceding production year, the brewer was not party to any agreement or other arrangement that would exclude it from qualifying (refer to the section below titled Impacts of non-microbrewer contract arrangements).
- Every affiliate that the brewer had that manufactured beer in the preceding production year was a microbrewer.
The Ministry of Finance will verify qualification with each brewer before the beginning of the sales year.
Learn more about Ontario beer manufacturers and microbrewers and the brands of beer they make.
Worldwide production
A brewer’s worldwide production means production anywhere in the world, not just Ontario, and includes all beer manufactured during the production year by:
- the brewer, even if the beer is manufactured under contract for another brewer,
- any affiliate of the brewer, even if the beer is manufactured under contract for another brewer, and
- another brewer under contract for the brewer (or its affiliates).
If you are a microbrewer for the current sales year and wish to remain a microbrewer in the upcoming year, you must meet all of the qualification criteria or you will lose your status as a microbrewer and any resulting benefits.
Impacts of non-microbrewer contract arrangements
Effective January 1, 2025, a microbrewer with a physical manufacturing facility in Ontario that makes commercial quantities of beer for sale in Ontario, may enter into a contract with a non-microbrewer for the production of beer for the microbrewer without the contract impacting its status as a microbrewer. Commercial quantities are quantities that are sufficient for a person to sell in the marketplace as part of a viable brewing business.
If a virtual brewer (i.e., no physical manufacturing facility) has an arrangement for beer to be made for it by another brewer, that other brewer must be a microbrewer at some point in the production year in order for the virtual microbrewer to qualify for and maintain its microbrewer status.
Virtual microbrewers entering into final packaging arrangements
Virtual microbrewers that enter into an arrangement with a non-microbrewer solely for the final packaging of beer will not affect their microbrewer status.
In some cases, final packaging of beer requires that filtering and carbonation be performed immediately before packaging. In other circumstances, specific substances can only be added at the time of final filtration. Where these processes are required as part of the final packaging, the filtering, carbonation and addition of substances will not affect microbrewer status.
Learn more about Ontario beer manufacturers and microbrewers and the brands of beer they make.
Small Beer Manufacturers ’ Tax Credit
The Taxation Act, 2007 includes a refundable corporate tax credit (Small Beer Manufacturers’ Tax Credit) for small beer manufacturers that do not qualify as microbrewers in a given sales year, provided the corporation meets all the required criteria (including limits on production).
Qualification for the Small Beer Manufacturers’ Tax Credit
In a given sales year, a beer manufacturer may qualify in respect of eligible sales of draft and non‑draft beer sold to purchasers in Ontario, if it meets certain criteria including:
- it has a permanent establishment in Ontario
- it did not qualify as a microbrewer for the sales year because its worldwide production of beer exceeds 4.9 million litres (49,000 hectolitres) using the lesser of the following amounts:
- the corporation’s worldwide production of beer for the previous production year
- the corporation’s average annual worldwide production of beer based on the last five production years (excluding any production years in which the brewer’s worldwide production was zero). (Note: This five-year average can only be used for determining qualification for a sales year commencing on or after March 2, 2026.)
- its worldwide production of beer was never more than 20 million litres (200,000 hectolitres) in any production year ending before January 1, 2018 and 30 million litres (300,000 hectolitres) in any production year beginning after December 31, 2017, and
- its total eligible sales in any sales year was never more than 20 million litres (200,000 hectolitres).
How to calculate the tax credit
The tax credit amount is determined by the qualifying small beer manufacturer's eligible sales in the sales year. A qualifying small beer manufacturer could still receive the tax credit even if its eligible sales for the sales year do not exceed 49,000 hectolitres.
The tax credit is subject to a phase‑out once eligible sales exceed 75,000 hectolitres.
Where an eligible small beer manufacturer is affiliated with or deemed to be related to any other brewer(s) at any time in the sales years, the total amount of the tax credit is based on the combined sales of the related brewers. Each individual brewer, provided it otherwise qualifies for the credit, will receive its proportionate share.
How to apply for the credit
To apply for the tax credit, a beer manufacturer must contact the Ministry of Finance to apply not more than 2 years after the end of the sales year for which it was eligible for the credit.
Provided it qualifies, a beer manufacturer will receive the tax credit as a lump sum at the end of the sales year for which it is eligible for the credit. However, it may opt to receive the tax credit in monthly instalments during the sales year if the request is made before the start of the sales year for which it is eligible for the credit.
Collection of tax
When applicable, beer manufacturers (microbrewers and non-microbrewers) and licensees of a brew pub collect the beer basic tax and must report and remit the tax to the Ministry of Finance on a monthly basis. The return and tax remittance must be received by the 20th day of the next month.
Filing a Beer Return
Learn how to complete your Beer Return in the Beer Return Guide.
Information about filing requirements, supporting schedules, penalties for late filing and failure to remit tax collected or payable and payment information for remitting the tax is provided in the Beer Return Guide.
Beer manufacturers deemed purchasers of their own products
A beer manufacturer (microbrewer or non-microbrewer) or licensee of a brew pub is deemed to be the purchaser of the beer it distributes in Ontario without charge and must pay any applicable beer basic tax.
Promotional distribution exemption
A beer manufacturer (microbrewer or non-microbrewer) or licensee of a brew pub may claim a limited beer basic tax exemption for up to 10,000 litres of beer it distributes without charge in Ontario each sales year to promote its beer.
Learn more about: Promotional distribution exemption: Beer, wine and spirits tax
Tax‑included pricing
Beer made by an Ontario beer manufacturer, that is subject to the beer basic tax, is priced to include the tax.
Beer manufacturers must provide information on the amount of the beer basic tax included in the price in a manner approved by the Minister of Finance.
Beer manufacturers may list the amount of beer basic tax included on the invoice to purchasers but are not required to do so.
If an invoice does not state the amount of beer basic tax included, brewers must prominently post or provide information that includes:
- the current beer basic tax rates, and
- a reference to the ministry's website at ontario.ca/finance for further information, including the list of beer manufacturers considered microbrewers for the sales year.
Alcohol licensing
The Alcohol and Gaming Commission of Ontario (AGCO) and LCBO are responsible for the general regulation of the beer industry in Ontario, including the licensing of alcohol manufacturers and sellers.
Direct bank deposit
Get your Ministry of Finance refund or rebate faster with direct deposit! It's easy and secure.
Download: Direct Deposit Request / Direct Deposit Authorization
Contact us
If this page does not address your specific situation, please refer to the Liquor Tax Act, 1996 and its related regulations, or contact us using one of the options below:
Email: AM-SAU.Enquiry@ontario.ca