What’s Changing April 1, 2026
- Adjusted rates of excise duty on tobacco products are changing based on Consumer Price Index adjustments. Rates for cigarettes, cigars, tobacco sticks, manufactured tobacco, and traveller’s products will all increase. (canada.ca)
- A cigarette inventory tax will be imposed on all duty-paid and special-duty-paid cigarettes held in inventory as of 12:01 am on April 1, 2026. The rate: $0.00382 per cigarette, or $0.764 per 200-cigarette carton. An exemption applies to retail inventory holding 30,000 or fewer cigarettes. (canada.ca)
Who Must Take Action
Applicable to: producers, importers, wholesalers, retailers who hold tobacco inventories, including duty-paid and special-duty-paid stocks. Small retailers below inventory threshold may be exempt. First Nations individuals or bands owning cigarettes on reserves may be exempt, but corporations on reserves generally are not. (canada.ca)
Compliance Steps and Timeline
| Deadline | Action required |
|---|---|
| Before April 1, 2026 | Identify and quantify all stocks of duty-paid or special-duty-paid cigarettes at 12:01 am. |
| On/after April 1, 2026 | File Form B273 — Excise Return – Cigarette Inventory Tax and pay due by May 31, 2026 for the inventory tax. |
| Maintain records sufficient for quantifying inventory (physical count, invoices, shelf inventory), especially if claiming exemption under 30,000 cigarette threshold. |
Practical Example
If a wholesaler holds 1,000 cartons (200,000 cigarettes) duty-paid at 12:01 am April 1, 2026, inventory tax is: 200,000 × $0.00382 = $764 due by May 31. Retailers holding fewer than 30,000 cigarettes (150 cartons) meet the small inventory exemption and do not file or pay, but must document eligibility.
Enforcement and Penalties
- Failure to file or pay may result in interest, penalties, and potentially seizure of inventory under the Excise Act.
- The CRA may audit figures and assess whether counts are “fair and reasonable” and adequately documented.
Tips to Stay Ahead
- Reconcile physical inventory just before April 1 to ensure counts reflect what’s held at 12:01 am.
- Review procurement and stock forecasts—ordering large loads just ahead of April 1 may increase liability.
- If you're near the threshold of exemption (30,000 cigarettes), consider trimming stocks or staggering inventory to stay under.
- Update accounting systems and training for staff to handle new forms (B273) and payment process via My Business Account.
This change isn't just about higher costs—it's about routine compliance, documentation, and operational adjustment. Being prepared by late March ensures you meet your obligations without surprises.