Adjusted Rates Of Excise Duty On Beer, Spirits And Wine

Effective April 1, 2024, the Canadian government has revised the Excise Duty rates for beer, spirits and wine, instituting a temporary freeze on annual rate increases for the next two years.

What is Excise Duty?

Excise duties are taxes that are charged on various products such as beer, spirits, wine and tobacco. The rates of these duties are outlined in the Excise Act, 2001.

For goods manufactured in Canada, duties are payable at the time of packaging, rather than at the point of sale. In contrast, for imported goods, the importer is responsible for covering these duties.

Each year on April 1, excise duties are typically adjusted to mirror the changes reflected in the Consumer Price Index. The adjustments of excise duty on beer, spirits and wines were capped at 2% for an additional 2 years on June 20, 2024, when Bill C-69, Budget Implementation Act, 2024, No. 1, received royal assent.

Adjusted Rates of Excise Duty on Beer

The adjusted rates of excise duty on beer are applicable to products containing malt liquor. Beer that does not contain more then 0.5% of absolute ethyl alcohol is not subject to excise duty.

The adjusted rates of excise duty on beer differ depending on whether beer is packaged within Canada or brewed by domestic brewers.

With respect to beer packaged in Canada, excise duties have been adjusted and are applicable to:

• Beer packaged in volumes exceeding 75,000 hectolitres in a single calendar year; and
• Beer packaged in Canada that is imported or produced from wort.

The adjusted rates of excise duty applicable as of April 1, 2024, and corresponding products include:

• Beer containing ethyl alcohol of 1.2% or below has a rate of $3.007 per hectolitre;
• Beer containing ethyl alcohol of more than 1.2% but less than 2.5% has a rate of $18.12 per hectolitre;
• Beer that contains more than 2.5% of absolute ethyl alcohol has a rate of $36.23 per hectolitre;

Additionally, the rate adjusted rates of excise duty on domestically brewed beer differs depending on the percentage of absolute ethyl alcohol by volume:

For domestically brewed beer containing no more than 1.2% of absolute ethyl alcohol, the excise rates include:

• $0.15035 per hectolitre for 0 to 2000 hectolitres of production volume;
• $0.3007 per hectolitre for 2001 to 5000 hectolitres of production volume;
• $0.6014 per hectolitre for 5001 to 15,000 hectolitres of production volume;
• $2.1049 per hectolitre for 15,001 to 50,000 hectolitres of production volume;
• $2.5560 per hectolitre for 50,001 to 75,000 hectolitres of production volume.

For domestically brewed beer containing more than 1.2%, but no more than 2.5% of absolute ethyl alcohol, the excise rates include:

• $0.906 per hectolitre for 0 to 2000 hectolitres of production volume;
• $1.812 per hectolitre for 2001 to 5000 hectolitres of production volume;
• $3.624 per hectolitre for 5001 to 15,000 hectolitres of production volume;
• $12.684 per hectolitre for 15,001 to 50,000 hectolitres of production volume;
• $15.402 per hectolitre for 50,001 to 75,000 hectolitres of production volume.

For domestically brewed beer containing more than 2.5% of absolute ethyl alcohol, the excise rates include:

• $1.8115 per hectolitre for 0 to 2000 hectolitres of production volume;
• $3.623 per hectolitre for 2001 to 5000 hectolitres of production volume;
• $7.246 per hectolitre for 5001 to 15,000 hectolitres of production volume;
• $25.361 per hectolitre for 15,001 to 50,000 hectolitres of production volume;
• $30.796 per hectolitre for 50,001 to 75,000 hectolitres of production volume.

Adjusted Rates of Excise Duty on Spirits and Wine

The adjusted rates of excise duty on spirits and wine are not applicable to non-alcoholic versions of these beverages.

The excise rates applicable to spirits include:

• $0.344 per litre of spirts that contain up to 7% of absolute ethyl alcohol;
• $13.569 per litre of spirts that contain above 7% of absolute ethyl alcohol.

The excise rates applicable to wine include:

• $0.022 per litre of wine containing up to 1.2% of absolute ethyl alcohol;
• $0.344 per litre of wine containing between 1.2% and 7% of absolute ethyl alcohol;
• $0.716 per litre of wine containing over 7% of absolute ethyl alcohol by volume.

Why have Excise Duties Been Capped?

In a move to support small business in the brewing, winemaking, cider-making, and distilling industries, the federal government has implemented a temporary cap on the adjustment of excise duties for beer, spirits and wine. Canadian wineries, breweries, cideries and distilleries play a crucial role in our economy by creating jobs and offering products that enrich our communities. As production costs rise, these businesses, and the people they employ, face increased challenges. To protect the positive economic contribution of these industries, the federal government has introduced this temporary cap on excise duty adjustments for beer, spirits, and wine.

For more information, please visit the Backgrounder: Supporting Canadian businesses with alcohol excise duty relief to learn about the adjusted excise rates.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.