Small Beer Manufacturers’ Tax Credit

By mmuise
Description:

The Small Beer Manufacturers' Tax Credit under the Taxation Act, 2007 provides for a refundable tax credit available to eligible beer manufacturers having worldwide production in the previous year, pursuant to the 2018 Ontario Budget, over 4.9 million litres (49,000 hL) but less than 30 million litres (300,000 hL).


Comments on Funding:

The tax credit amount is determined by an eligible small brewer's eligible sales in the sales year. An eligible small brewer could still receive the tax credit even if its eligible sales for the sales year do not exceed 49,000 hL.
The maximum tax credit available to an eligible small brewer is, pursuant to the 2018 Ontario Budget, $2,449,510 for non‑draft beer and $1,788,010 for draft beer on eligible sales exceeding 49,000 hL and up to and including 200,000 hL.
The tax credit is subject to a phase‑out once eligible sales exceed 75,000 hL and is fully eliminated when eligible sales exceed 200,000 hL in the sales year.

Deadline: Rolling deadline
Eligibility:

A beer manufacturer may qualify in respect of eligible sales of draft and non‑draft beer sold to purchasers in Ontario during a sales year, if it meets certain criteria including:

  • it has a permanent establishment in Ontario;
  • it cannot be a microbrewer eligible for the reduced beer basic tax rates;
  • its worldwide production of beer for the previous production year must be, pursuant to the 2018 Ontario Budget, over
  • 9 million litres (49,000 hL) but less than 30 million litres (300,000 hL);
  • its worldwide production of beer was never more than 20 million litres (200,000 hL) in any production year ending before January 1, 2018 and 30 million litres (300,000 hL) 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 hL).
Application Steps:

Applicants must 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 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.

Documentation Needed:

No specific documentation has been identified.

Other Things to Note:

The beer basic tax rates were scheduled to increase by an adjustment factor on March 1, 2023. The Minister of Finance signed an amendment to O. Reg 257/10, made under the Liquor Tax Act, 1996 to delay the date of the next scheduled adjustment to March 1, 2024. As a result, the current beer basic tax rates will continue to apply until February 29, 2024.
Updated: September 05, 2023

About the author
mmuise