Important changes to Tobacco Tax Reporting for TOBACCO MANUFACTURERS Introducing the New Tobacco Tax Return Effective November 30, 2016

guidelines for today’s webinar Print off a copy of the Tobacco Tax Return in order to highlight key sections of each worksheet Pre-read the instructions tab of the return Questions that cannot be answered will be “parked” for future follow up

webinar goals Walk through the entire Tobacco Tax Return, noting any key differences from the current return Supplement the instructions that are included on the first tab/worksheet of the Tobacco Tax Return (TTR) Answer your questions, to the best of our ability (and park those that will require follow up This presentation will follow the instructions fairly closely, while adding some helpful examples. We recommend that you pre-read the instructions (Tab 1) before attempting the completion of the new Tobacco Tax Return.

what’s new New look and feel Many design changes were influenced in part by the Tobacco Tax Steering Committee and their design for a universal or generic tax return As such, the new Tobacco Tax Return bears some similarity to that which is used in Ontario Electronic filing SK Finance will no longer be processing paper returns after November 30, 2016. The electronic files will be uploaded to Saskatchewan Electronic Tax Services (SETS) Built in functionality to make completion of the return easier when completed electronically When filling out the new return, enter information into the white cells only. Information that appears in the green cells will have been carried over from the white cells in other tabs (i.e., schedules) in the worksheet

tobacco tax return Let’s start with the Tobacco Tax Return. Also known as the Tobacco Tax Return or the Summary Return. The Tobacco Tax Return is now an MS Excel spreadsheet and consists of instructions, a Summary Return and five schedules so that all required information and documents appear in one downloadable file and are accessible from worksheets/tabs located along the bottom of the document. One of the key changes you will see is Inventory Reporting. While optional, inventory reporting will allow companies that have SK marked product located out of province to defer the associated tobacco tax until it enters SK. This is not a change to our legislation. The use of inventory reporting allows the manufacturer to only pay tax on a product when it enters SK. Another major change in reporting is that all products other than cigars are reported on a unit basis rather than a tax amount/dollars. Cigars will still be reported as a dollar figure. Line #2 (Manufactured) is used to report all SK marked product that is manufactured regardless of its location as well as any unmarked product that is manufactured in SK. Lines 16 through 20 on the bottom right side of the new Tobacco Tax Return replicate the information on the current return. Line 21 is used to enter the total amount of commission claimed for the year as per your last return. This allows the current commission on line 17 to be calculated automatically. Please remit payment equal to Line 18 of your return plus your account balance and include the amount to be remitted on Line 20. In the upper left hand corner under Return Type, please indicate whether this is an original or amended return. In the case where you want to change a previously filed return, please check the amended box and upload the revised return through SETS. Sask Finace will use the most current return as the return of record. Under inventory: If Manufacturers choose not to report inventory, they will be required to remit the tax for all SK marked product for the current period whether it has been delivered to SK or not.

TT-1 Imports & Non-tax Memos Schedule 1 or “TT1” is used to report product that has been imported into SK as well as any purchases from non-tax memo suppliers. The form has been designed to insert lines if required – in the white spaces. Instructions for Manufacturers: TT1 is used to report importations of all unmarked tobacco products into SK. It includes tax memo’d sales to licensed Wholesalers/Importers as well as imports of unmarked tobacco products sold directly to customers. Note: there is no longer the requirement to report individual sales of Saskatchewan marked products to retailers since you are now reporting all of your manufactured SK product. SK Finance will accept either invoice level transactions or report summary information (as provided in a backup report and then uploaded to SETS as “supporting documentation”) Part A of the TT-1 is used to report your imports and non memo’d purchases Part B of the TT- 1 is used to enter any adjustments to the information provided in Part A. The net total of Parts A and B will automatically carry forward to the Summary Return and appear on Line #3.

TT-2 Tax Memo Purchases Schedule #2 or TT-2 is to be completed by licensed importers/wholesalers. Tobacco manufacturers will not use this schedule unless they purchase tobacco products from another manufacturer. TT-2 is used to report the tobacco tax memo’d transactions that were to supplied to you by licenced manufacturers as well as any adjustments on those transactions After the 10th of each month, a tobacco tax memo report will be available for Wholesalers to download from their SETS account. This report will have transaction level detail for all tobacco tax memos of invoices that has been provided by Tobacco Manufacturers. The total line from each Wholesaler’s Tobacco Tax Memo report is to be entered in part A of TT-2. Any adjustments to be made from the Tobacco Tax Memo report should be reported in detail in Part B of TT-2. Each adjustment must be accompanied with an explanation from the drop down list on the worksheet. Items identified as a carry forward will be included in the Tobacco Tax Memo report for the following reporting period. Documentation that supports these adjustments must be retained for audit purposes. The net value from Parts A and B will automatically carry forward to Line 4 on the Summary Return as Tobacco Tax Memo purchases.

TT-3 Exports out of Saskatchewan Schedule 3 or TT-3 is used to report untaxed sales of SK marked products and unmarked tobacco products that have been sold and delivered to a location out of SK. This includes transfers of product from a location within SK to a warehouse or holding facility located outside of SK. We will accept either invoice level transactions or report summary information (as provided in a backup report and then uploaded to SETS as “supporting documentation”) The totals from this schedule will appear on the Line #7 Of the Summary Return. Please retain any documentation for audit purposes.

TT-4 Tax Memo Sales to Other Collectors Schedule 4 or TT-4 is to be completed by Tobacco Manufacturers only to report the total tax memo sales of all SK marked and unmarked products that were sold to their customers The total amounts reported on this schedule must match the Tobacco Tax Memo Transactions report* supplied to SK Finance through the SETS system The information reported on this schedule will carry forward to Line 8 of the Summary Return. We have adopted the format that AB requires for filing Tax Memos to them with a change in the number used to identify your customers. I will be providing the Tobacco Tax Memo File Format & Processing Requirements, an updated list of all licensed tobacco filers and the contact information for any questions in an email after this presentation.

TT-5 Tax ($) Adjustments Schedule 5 or TT – 5 is to be completed to claim any dollar adjustments on the tobacco tax return. All amounts on this schedule are to be reported in dollars. Part A is used to enter the detail along with an adjustment reason for each individual adjustment that is to be claimed on the return. Please ensure that any supporting documentation is retained for audit purposes. The positive or negative totals from Part A will carry forward to Line 13 of the Summary Return. A positive number on TT-5 will result in a reduction of the Tobacco tax. Part B of TT-5 is a summary of any SK tax that was either paid or collected in Schedules 1 through 4. This amount will carry forward to Line 15 of the Summary Return.

getting help If, at any time, you would like assistance with any of the changes described here, please do not hesitate to contact either of the following Revenue Division staff members: Zeljko Ruzic Tobacco Tax Support Tel: 306-787-7685 Toll Free: 1-800-667-6102 Ext. 7685 Email: zeljko.ruzic@gov.sk.ca Craig Lyon Tel: 306-787-6616 Toll Free: 1-800-667-6102 Ext. 6616 Email: craig.lyon@gov.sk.ca Both Zeljko and myself are available to answer yours questions. Our goal is to have your returns done completely and as easily as possible.

questions Cigars are the only product that will continue to be reported in dollar amounts rather than units. How is the tax per cigar reported on a summary level when there are different prices? Take the total tax of your cigars and divide it by the quantity or units to determine the average taxable selling price.

recap of Parking Lot items Thank you for participating in this webinar. Please feel free to contact me or Zeljko with any additional questions as they arise. I would also like to remind everyone to ensure that they have tested their SETS processes (either on your own or with our help) and to complete and send back your client experience forms.