RETURNS AND REFUNDS

1. For the purposes of paragraph 4 of subsection 2 (1.7) of the Act, the prescribed percentage is 22 per cent in respect of all categories of cigars. O. Reg. 135/01, s. 1. 2. Revoked: O. Reg. 423/00, s. 1. 3. (1) In this section, “applicant” means a collector, registered importer, retail dealer or wholesaler who applies for a refund under this section; “bankruptcy debt” means a debt incurred by a person who subsequently becomes a bankrupt within the meaning of the Bankruptcy and Insolvency Act (Canada); “debt” means the portion of the sale price of tobacco that remains unpaid and owing to an applicant; “designated time limit” means, in respect of an application for a refund under this section, within four years after, (a) the last day of the applicant’s fiscal year in which the applicant wrote off the debt as an uncollectible account, if the refund relates to a debt other than a bankruptcy debt or a receivership debt, (b) the date of filing of the applicant’s claim with the debtor’s trustee in bankruptcy or receiver, as the case may be, if the refund relates to a bankruptcy debt or a receivership debt, or (c) the date of the loss, destruction, theft or contamination of the tobacco, if the refund relates to tobacco that was lost, destroyed, stolen or contaminated; “receiver” includes a receiver and manager; “receivership debt” means a debt owed by a debtor who is in receivership and whose property is under the control of a receiver; “sale price” includes, in respect of the sale of tobacco, the amount on account of the tax under the Act in respect of the tobacco. O. Reg. 21/00, s. 1; O. Reg. 135/01, s. 2 (1). (2) The Minister may allow a refund to an applicant of an amount on account of tax collectible or payable under the Act that has been remitted by the applicant to the Minister, or that has been paid over by the applicant in accordance with the Act for subsequent remittance to the Minister, (a) if the tax is in respect of tobacco sold by the applicant and all or part of the sale price has not been paid and has become an uncollectible debt; or (b) if the tax is in respect of tobacco that has been lost, destroyed, stolen or contaminated, and cannot be sold or used by the applicant. O. Reg. 21/00, s. 1. (3) Despite subsection (2), no refund is allowed in any of the following circumstances: 1. If any portion of the sale price of the tobacco referred to in clause (2) (a) has been assigned by private contract, with or without recourse, other than for security purposes, to a person other than the Minister. 2. If a refund of an amount on account of the tax has previously been made, or the applicant is otherwise entitled under the Act or the regulations to receive or to apply to receive a refund of or an allowance in compensation for the amount on account of the tax. 3. If the applicant and the debtor were not dealing at arm’s length within the meaning of section 251 of the Income Tax Act (Canada) at the time of the sale of the tobacco, in the case of tobacco referred to in clause (2) (a). 4. If the applicant has not complied with the requirements of this section. 5. If the Minister is not satisfied that, i. in the case of tobacco referred to in clause (2) (a), the debt is uncollectible, or ii. in the case of tobacco referred to in clause (2) (b), the tobacco cannot be used or sold by the applicant and compensation referrable to the amount of the refund has not been received by the applicant. 6. If the application for the refund is not made before the end of the designated time limit. O. Reg. 21/00, s. 1. (4) The amount of the refund is determined as follows: 1. If all or part of the sale price of the tobacco sold by the applicant has not been paid and has become an uncollectible debt, other than a receivership or bankruptcy debt, the amount of the refund is equal to that portion of the amount remitted or paid over by the applicant on account of tax with respect to the tobacco that the uncollectible debt bears to the total sale price of the tobacco. 2. If all or part of the sale price of the tobacco sold by the applicant has not been paid and has become a receivership or bankruptcy debt, the amount of the refund is equal to that portion of the amount remitted or paid over by the applicant on account of tax with respect to the tobacco that the receivership or bankruptcy debt bears to the total sale price for the tobacco. 3. If the tobacco has been lost, destroyed, stolen or contaminated, the amount of the refund is equal to the amount remitted or paid over by the applicant on account of tax with respect to the tobacco. O. Reg. 21/00, s. 1. (5) If the applicant is not a collector designated under subsection 4 (1) of the Act, the applicant may apply for a refund under this section in respect of an uncollectible debt by delivering to the Minister an application for the refund in a form acceptable to the Minister, together with all other information and documents that the Minister requires, including the following: 1. Copies of all invoices for the sale of tobacco in respect of which the refund is claimed. 2. Proof satisfactory to the Minister that the amount claimed was remitted to the Minister under the Act or was paid over as required under the Act for remittance to the Minister. 3. A signed statement by the applicant certifying the amount of the debt and certifying that the applicant does not have any right to receive any payment in satisfaction of part or all of the debt from any person other than the debtor or the debtor’s representative. 4. Proof satisfactory to the Minister that all reasonable collection action has been taken to obtain payment of the debt, that the debt is unsecured, that the debt is uncollectible and that the applicant has written off the debt as uncollectible in accordance with generally accepted accounting principles. 5. If the debt is a receivership debt, a signed statement by the applicant certifying that the applicant has filed with the debtor’s receiver a claim in respect of the debt to which the refund relates. 6. If the debt is a bankruptcy debt, a copy of the applicant’s proof of claim in the bankruptcy in respect of the debt to which the application relates, proof satisfactory to the Minister that the proof of claim was not disallowed and proof satisfactory to the Minister that the applicant will not receive payment of the debt from the trustee in bankruptcy or other person. 7. If the debt is a bankruptcy debt or a receivership debt, an assignment to the Minister in a form satisfactory to the Minister of the portion of the debt equal to the amount of the refund claimed. O. Reg. 21/00, s. 1; O. Reg. 135/01, s. 2 (2). (6) If the applicant is not a collector designated under subsection 4 (1) of the Act, the applicant may apply for a refund under this section in respect of tobacco that has been lost, destroyed, stolen or contaminated by delivering to the Minister an application for the refund in a form acceptable to the Minister, together with all other information and documents that the Minister requires, including the following: 1. A copy of any settlement by or written confirmation from an insurance company confirming settlement of any claim for the loss with respect to which the refund is being claimed. 2. A copy of any police report made with respect to the loss. 3. A copy of any fire marshal’s report made with respect to the cause of the loss. 4. Proof that the amount claimed was remitted to the Minister under the Act or was paid over in accordance with the Act for remittance to the Minister. O. Reg. 21/00, s. 1; O. Reg. 135/01, s. 2 (3). (6.1) Despite subsections (5) and (6), the following rules apply to an applicant who is not a collector designated under subsection 4 (1) of the Act if the total amount of refunds that will be claimed by the applicant under this section for a calendar year does not exceed $500: 1. The applicant is not required to submit the documents required to be submitted with the application under subsection (5) or (6), as the case may be. 2. The applicant shall retain the documents referred to in paragraph 1 for a period of not less than seven years after the day the application for the refund is made to the Minister and shall produce them at any time during that period at the request of the Minister. O. Reg. 35/04, s. 2. (7) If the Minister is satisfied that an applicant, other than a collector designated under subsection 4 (1) of the Act, is entitled to a refund under this section, the Minister may pay the refund to the applicant. O. Reg. 21/00, s. 1; O. Reg. 135/01, s. 2 (4). (8) If the applicant under this section is a collector designated under subsection 4 (1) of the Act, the following rules apply: 1. The collector may deliver to the Minister an application for the refund in a form approved by the Minister and may then deduct and retain the amount of the refund from an amount that the collector would otherwise remit to the Minister under the Act. 2. The collector shall retain for subsequent verification by the Minister the material in connection with the refund application that would otherwise be required to be delivered to the Minister by an applicant under subsection (5) or (6) with an application for the refund. 3. If the Minister disallows all or part of the refund, the Minister shall cause to be served on the collector a statement of disallowance under section 19 of the Act. The collector shall remit to the Minister the amount of the refund disallowed by the Minister, together with interest on the amount at the rate prescribed under section 25 of Regulation 1034 of the Revised Regulations of Ontario, 1990 for the period during which the collector retained the amount. The collector shall remit the amount with the next return or at any earlier time specified in the statement of disallowance, whether or not an objection to or an appeal from the disallowance is made or taken. O. Reg. 21/00, s. 1; O. Reg. 135/01, s. 2 (5). 3.1 (1) This section applies if a refund in respect of a debt is made under section 3 and the applicant subsequently receives, (a) a payment from the debtor; or (b) a payment from another person in satisfaction of all or part of the debt. O. Reg. 21/00, s. 1. (2) When the applicant receives a payment, the applicant shall pay to the Minister the portion of the payment that is determined by the Minister to have been paid to the applicant on account of tax payable under the Act. O. Reg. 21/00, s. 1. (3) The payment to the applicant shall be allocated, for the purposes of this section, to the applicable sales of tobacco in the order of the dates of the applicable sales. O. Reg. 21/00, s. 1. 4. Where an application for a refund under this Regulation, Regulation 1034 of the Revised Regulations of Ontario, 1990 (General), Regulation 1035 of the Revised Regulations of Ontario, 1990 (Refunds) or section 38 of the Act has been supported in whole or in part by one or more invoices on or in connection with which the applicant has misrepresented a material fact, the amount of the refund that may be made by the Minister in respect of the application shall be reduced by the greater of $5 or the amount of the refund claimed through the use of the invoice or invoices. R.R.O. 1990, Reg. 1033, s. 4. 5. (1) For the purposes of subsection 2.1 (1) of the Act, every invoice shall contain or include, (a) the name and address of the vendor; (b) amounts described in paragraphs 1, 2 and 3 of subsection 2 (1.7) of the Act for each cigar purchased by a retail dealer; (c) the prescribed percentage as specified in section 1; (d) the amount of tax charged for each cigar; (e) the quantity of each cigar purchased by a retail dealer; and (f) the date of the purchase. O. Reg. 135/01, s. 3. (2) For the purposes of subsection 2.1 (4) of the Act, every invoice shall show, (a) the name and address of the vendor; (b) the purchase price of each cigar on which tax was calculated; (c) the quantity of each cigar purchased; (d) the amount of tax charged for each cigar; and (e) the date of the purchase. O. Reg. 135/01, s. 3. 6. For the purposes of clause 7.1 (5) (b) of the Act, every tear tape manufacturer shall maintain records accounting for the following: 1. The quantities of tear tape manufactured. 2. The quantities of tear tape sold. 3. The names and addresses of persons to whom tear tape is sold. 4. The dates of sales of tear tape. 5. The dates of shipment for sales of tear tape. 6. The reference numbers of all invoices issued on sales of tear tape. O. Reg. 35/04, s. 3. 7. (1) Revoked: O. Reg. 423/00, s. 2 (1). (2) Revoked: O. Reg. 135/01, s. 4 (1). (3) On or before the 28th day of each month, every person to whom the Minister has issued a permit to mark or stamp cigarettes shall deliver a return in the form approved by the Minister, accompanied by the supporting schedules, with respect to cigarettes marked or stamped in the immediately preceding month and accounting for the indicia received and used by the person during that month. O. Reg. 35/04, s. 4 (1). (3.1) Despite subsection (3), a person is not required to deliver a return under that subsection if the person satisfies the requirements of subsection 13 (1) of Regulation 1034 of the Revised Regulations of Ontario, 1990 and, with the return required under that subsection, delivers the supporting schedules for the immediately preceding month that would otherwise be required under subsection (3), containing the information described in that subsection. O. Reg. 35/04, s. 4 (1). (4) On or before the twenty-eighth day of each month, any person who manufactures a tobacco product shall deliver to the Minister a return in the form approved by the Minister with respect to the tobacco manufactured for distribution in Ontario in the immediately preceding month. R.R.O. 1990, Reg. 1033, s. 7 (4); O. Reg. 423/00, s. 2 (4). (4.1) On or before the 28th day of each month, every holder of a subsisting permit to manufacture tear tape shall deliver to the Minister a return in the form approved by the Minister with respect to all tear tapes manufactured in the immediately preceding month for use in marking cigarettes for sale, delivery or distribution in Ontario. O. Reg. 35/04, s. 4 (2). (5) On or before the seventh day of each month, every dealer who sells, without collecting tax, cigarettes that are marked or stamped with an indicium, taxable cigars or taxable tobacco other than cigarettes or cigars, to a collector shall deliver to the Minister a return in the form approved by the Minister in duplicate with respect to the dealer’s sales of such tobacco products in the immediately preceding month. R.R.O. 1990, Reg. 1033, s. 7 (5); O. Reg. 423/00, s. 2 (5). (6) On or before the seventh day of each month, every dealer who sells unmarked cigarettes to a collector shall deliver to the Minister a return in the form approved by the Minister in duplicate with respect to the dealer’s sales of such tobacco products in the immediately preceding month. R.R.O. 1990, Reg. 1033, s. 7 (6); O. Reg. 423/00, s. 2 (6). (7) On or before the 28th day of each month, every holder of a wholesaler’s permit who is not a collector designated under subsection 4 (1) of the Act shall deliver a return in the form approved by the Minister with respect to all tobacco products acquired in Ontario in the immediately preceding month. O. Reg. 135/01, s. 4 (2). (7.1) On or before the 28th day of each month, every holder of a wholesaler’s permit who is not a collector designated under subsection 4 (1) of the Act but is designated a collector under subsection 4 (1.3) of the Act shall deliver a return in the form approved by the Minister with respect to all tobacco products, other than cigars, acquired in Ontario in the immediately preceding month. O. Reg. 135/01, s. 4 (2). (8) Every dealer shall deliver to the Minister, at least ten days prior to the delivery of tobacco in bulk to a person carrying on business outside Ontario, other than a retail dealer referred to in subsection 3 (5) of the Act or holding a permit issued by another province or territory that permits the retail dealer to sell tobacco in such province or territory, a return in the form approved by the Minister with respect to the tobacco to be delivered outside Ontario. R.R.O. 1990, Reg. 1033, s. 7 (8); O. Reg. 423/00, s. 2 (8); O. Reg. 35/04, s. 4 (3). (9) On or before the twenty-eighth day following the month in which the tobacco in bulk was delivered to a person outside Ontario, every dealer shall deliver to the Minister a return in the form approved by the Minister accompanied by the supporting schedules, with respect to the tobacco delivered outside Ontario in the immediately preceding month. R.R.O. 1990, Reg. 1033, s. 7 (9); O. Reg. 423/00, s. 2 (9). (10) On or before the twenty-eighth day of each month, every holder of an unmarked cigarette dealer’s permit shall deliver to the Minister a return in the form approved by the Minister accompanied by the supporting schedules, with respect to all unmarked cigarettes delivered within or outside Ontario in the immediately preceding month. R.R.O. 1990, Reg. 1033, s. 7 (10); O. Reg. 423/00, s. 2 (10). (11) On or before the 28th day of each month, every interjurisdictional transporter shall deliver to the Minister a return in the form approved by the Minister with respect to all tobacco products transported into and out of Ontario in the immediately preceding month. O. Reg. 35/04, s. 4 (4). 8. (1) For the purposes of subsection 19 (3.4) of the Act, (a) the prescribed threshold for an unverifiable loss is 0.1 per cent; (b) the amount of a person’s unverifiable losses of tobacco is the amount by which the person’s available inventory exceeds the amount of tobacco that the person verifies to have been sold, lost, stolen, destroyed, contaminated, consumed or distributed; and (c) a person has excess unverifiable losses to the extent the person’s unverifiable losses of tobacco for a period of 36 continuous months exceed the amount equal to 0.1 per cent of the person’s available inventory of tobacco for that period. O. Reg. 35/04, s. 5. (2) For the purposes of subsection (1), a person’s available inventory of tobacco for a period of 36 months is calculated using the formula, A + B – C in which, “A” is the amount of the person’s opening inventory of tobacco at the beginning of the period, “B” is the amount of tobacco produced, received or purchased by the person during the period, and “C” is the amount of the person’s closing inventory of tobacco at the end of the period. O. Reg. 35/04, s. 5. Forms 1, 2 Revoked: O. Reg. 423/00, s. 3. Form 3 Revoked: O. Reg. 271/92, s. 2. Forms 4 - 24 Revoked: O. Reg. 423/00, s. 3.