As shared in a May 6 notice, the 2022 Canadian Federal Budget announced plans to repeal the exemption of the federal excise duty that domestic suppliers receive for their 100 per cent Canadian-manufactured wine packaged on or after June 30, 2022.
The BC Liquor Distribution Branch (LDB) is reminding BC Vintners Quality Alliance (VQA) suppliers that beginning January 1, 2023, excise duty will be deducted from the supplier cost when calculating the VQA rebate amount for eligible wine received into the LDB warehouse, on the assumption that all VQA wines delivered to the LDB are packaged on or after June 30, 2022.
Please see below for important details on the LDB’s excise exempt transitional process.
One-year transitional process for excise exempt product distributed through LDB warehouses
In recognition that it may take additional time for wineries to move through excise exempt inventory packaged before June 30, 2022, the LDB will adopt a one-year transitional process. This process will allow BC VQA suppliers to apply for a temporary adjustment on their VQA rebate calculation for any remaining excise exempt inventory (product packaged prior to June 30, 2022) that is shipped to LDB warehouses.
Step one: inventory record
To qualify for the temporary adjustment, VQA suppliers will be required to provide the LDB the on-hand quantity of excise exempt VQA wine packaged prior to June 30, 2022 and available for sale as of December 31, 2022. This inventory record should include the following details:
- Applicable BC VQA SKU number(s)
- Number of cases of excise exempt (packaged prior to June 30, 2022) BC VQA wine remaining and available for sale at your warehouses in BC as of December 31, 2022
- Case configuration (number of bottles per case)
- Date the wine was packaged
Please email the inventory record report in a .csv or excel file to BCVQASupport@bcldb.com by January 31, 2023.
Step two: monthly reporting
To receive an excise exempt adjustment, wineries with eligible VQA product will need to perform the following administrative process on a monthly basis starting February 2023:
- Review the VQA Rebate Detail Report currently provided by the LDB to support the VQA rebate payments. First report will be available in February 2023 for January 2023 deliveries.
- If any purchase orders (POs) listed in the VQA Rebate Detail Report include cases packaged before June 30, 2022, and are therefore excise exempt, indicate the number of those cases in the VQA Rebate Detail Report
- Email the completed VQA Rebate Detail Report back to BCVQASupport@bcldb.com.
- If your request is approved, the winery will receive an adjustment payment; these adjustments will be processed quarterly
Please note that this one-year transitional period will end on December 31, 2023 and will not be extended.
To reduce the administrative effort associated with tracking the exempt inventory, BC VQA wine suppliers may choose to ship the excise exempt inventory prior to shipping the excise payable inventory, and/or ship it through their direct delivery channels.
As a reminder, suppliers must maintain adequate books and records for a period of six years and these records are subject to audit by the LDB.
Earlier communication regarding the repeal of the federal excise duty exemption on 100 per cent Canadian wine are posted on the LDB Wholesale Operations website at the following links:
- May 6, 2022 - Federal Excise Duty Exemption on 100 per cent Canadian Wine to be Repealed
- May 19, 2022 - Changes to Calculation of BC VQA Rebate Program deferred
- July 4, 2022 - Changes to Calculation of BC VQA Rebate Program deferred until January 1, 2023
For any questions on the BC VQA rebate program, please contact LDB BC VQA Support: BCVQASupport@bcldb.com.
Thank you for your attention to this matter.