Our firm serves a variety of industries. However, one of our concentrations of clients is in craft breweries. In helping craft breweries with their tax and accounting needs we were speaking with some tax specialists these past few weeks. We became aware that many craft breweries may be missing a tax credit that they are entitled to. We wanted to write a blog to ensure we spread the word about this missing tax credit which relates to the markup they pay to the BC Liquor Distribution Branch (BCLDB).
This example is specific to craft breweries in British Columbia. However, if you are in another province reach out and we can discuss your situation directly.
The tax credit that many craft breweries may be missing is a tax rebate related to the markup they pay to the BC Liquor Distribution Branch.
What is the markup paid to the BC Liquor Board Distribution Branch?
Let’s quickly review what the markup is. When the brewery produces its beer, it is sold to external companies like pubs and restaurants. However, when produced, they are also deemed to have immediately sold to their own taproom. The brewery is required to report these “sales” figures weekly to the BC Liquor Distribution Branch. The BC Liquor Distribution Branch then calculates its own calculation of the deemed markup (adjusted for container deposits). The BCLDB then takes a pre-authorized debit from the brewery’s bank account for the amount owed for the markup. This is like an extra tax that the BCLDB takes upfront. The brewery receives a pre-authorized debit for the amount taken.
The issue is that the markup includes a GST component. Many breweries are unaware of this because to calculate it, you need to compare both the submitted batch report to the sales report provided by BCLDB. It never directly discloses or indicates the GST portion of the markup. The two reports need to be compared to determine the calculation.
The GST you pay on this markup can be claimed on your GST/HST return. Our tax consultant estimates that over 50% of the breweries and distilleries are not aware of this tax credit, meaning they could be missing out on hundreds or even thousands of dollars in tax savings depending on your gross sales and related markup charges.
Where can I get more information?
Your BC Liquor Distribution Branch requirements can be reviewed here: https://www.bcldb.com/doing-business-ldb/payment-to-ldb
At Virtual Heights Accounting, we want to ensure our clients get every tax benefit available to them. We urge all craft breweries and distilleries in British Columbia to review their tax situation with us or another tax professional to make sure you are receiving all tax credits available to you.
If you have any questions, reach out directly and we can discuss your tax situation more specifically: https://vhaccounting.ca/contact-us/
We hope this blog has been informative and helpful – please share as we would like to get the word out about this missing credit.
This blog is intended for general use and understanding. Specific cases can alter recommendations which are often based on current court cases. These recommendations may evolve as new court cases or CRA interpretations become available. Thus direct professional advice is always recommended to ensure you are getting the right information for you and your business.