and Revenue Administration
Indian Tax Exemption (AITE)
Special Notice Vol. 4 No. 15
||February 6, 2017
|| Alberta Treasury Board and Finance,
Tax and Revenue Administration
|For more information:
4 No. 15 / June 2007
INDIAN TAX EXEMPTION SPECIAL NOTICE:
TOBACCO TAX CALCULATIONS FOR AITE EXEMPT SALE RETAILERS
The Government of Alberta recognizes that many First Nations people and communities in the province prefer not to describe themselves as Indians/Indian bands. These terms have been used where necessary to reflect their legal meaning in the federal Indian Act.
On April 20, 2007 Alberta's tobacco tax rates changed. Since this
increase, large numbers of claims have been calculated incorrectly
due to problems with rounding. The Tobacco Tax Act states
that when the tax payable is calculated and it includes a fraction
of a cent, the tax payable amount should be rounded to the next
higher cent. The tax payable referred to in legislation includes
the “ Tax Exempt Amount” calculated by retailers. The tax rate should
not be rounded.
- To help retailers calculate their claims correctly and avoid
claim-processing delays, we are providing examples for reference.
- The tax rate on a package of 25 cigarettes (A3) is $4.625.
This amount must be displayed on the paper voucher in the
“Tax Rate” column. The “Tax Exempt Amount” should be rounded
up using $4.63, if a single package was sold to a consumer.
If the consumer purchases two packages of this product, then
the tax exempt amount would be $4.625 “Tax Rate” multiplied
by “Quantity” 2 = $9.25 “Tax Exempt Amount”.
Do not round the tax rate then multiply
$4.63 by 2 = $9.26, as this will result in a delay of your
- The tax rate on smokeless snuff (15 grams C22) is $2.775 per
unit and this amount must be displayed on the paper voucher.
The “Tax Exempt Amount” should be rounded up to $2.78 if one
15 gram container is sold.
If two 15 gram containers are sold to a consumer then the “Tax
Exempt Amount” would be $2.775 “Tax Rate” multiplied by 2 =
$5.55 “Tax Exempt Amount”.
Do not round the tax rate then multiply $2.78
by 2 = $5.56, as this will result in a delay of your refund.
- If the retail selling price for a package of cigars is $15.26
per package and there are 20 cigars in this package, the following
calculations should occur:
$15.26 divided by 20 cigars = $0.763 per cigar. In the tax
rate chart, the rate for this cigar category is 49% (D2). The
“Tax Exempt Amount” would be $0.763 x 49% = $0.374. This “Tax
Exempt Amount” per cigar should be rounded up to $0.38 per cigar.
When the $0.38 is multiplied by 20 cigars, the tax exemption
for the package is $0.38 x 20 = $7.60.
- Due to the large volume of errors in claims received since the
tax rate change processing time has increased substantially. Please
be prepared for some delays in the processing of your claim. Paper
claims that have been prepared using the correct tax rates and
calculations will be processed faster than those prepared incorrectly.
- Please ensure that the tax rates used on your Point
of Sale (POSS) system and your paper vouchers have not been rounded
or your refunds will be delayed.
- POSS Retailers must ensure that their tax rate tables
are updated correctly with the current tax rates for all products;
otherwise, transactions may be rejected.
- Please contact us at 780-427-3044 if you have any questions
regarding this notice. If you are calling long distance from anywhere
in Alberta, please call 310-0000 then enter 780-427-3044 to
avoid long distance charges.