Collective Arts Brewing Facing Massive Tax Bill Over Co-Brew Deal with Steam Whistle Brewing

HAMILTON, ONThe Hamilton Spector reports that Collective Arts Brewing has received a provincial tax bill for almost half a million dollars due to a deal to have some of its beer brewed at Steam Whistle Brewing.

According to the report, Collective Arts contracted out the brewing of a lager to Steam Whistle in 2021 because of capacity issues at its plant in Hamilton. However, this was done without taking into account a particular clause in Ontario’s brewery taxation structure:

In Ontario, there are different tax rates for microbrewers and large beer brewers, as well as a Small Beer Manufacturers’ Tax Credit (SBMTC), a middle ground between the two.

According to provincial beer tax legislation, if a microbrewery has beer made for them by another brewer, that brewer — in this case, Steam Whistle — must also be a microbrewer for the other company — that is, Collective Arts — to retain its microbrewer status.

As a consequence, Collective Arts was launched into the same tax bracket as large manufacturers, like Molson Coors, despite brewing far less beer. Ontario microbreweries pay more than 50 per cent less tax than the big brewers.

The article goes on to note that Collective Arts filed an appeal about the bill earlier this year but it was rejected. The brewery now has to pay more than $489,000, and is looking into options to cut costs and raise capital to cover the payment.

For more details, see the full article.

Source: Hamilton Spectator
Photo: Collective Arts Brewing

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