Ontario Regulation 167/25 introduces amendments to the framework governing the Small Beer Manufacturers’ Tax Credit under the Taxation Act, 2007. This regulation updates Ontario Regulation 280/11 to refine the eligibility calculations, transitional measures, and formulas used to determine the value of the tax credit for small beer manufacturers.

The first change updates references to legislation, replacing the mention of the Alcohol, Cannabis and Gaming Regulation and Public Protection Act, 1996 with the Liquor Tax Act, 1996, thereby ensuring consistency in legal cross-referencing. More substantively, the regulation introduces a transitional framework for sales years beginning on March 3, 2025 and ending on March 1, 2026, during which different credit values apply depending on whether the beer is draft or non-draft, and on whether sales occurred before or after August 1, 2025. This ensures that the transition into the new credit calculation structure is gradual and reflective of market realities.

For this transitional year, the tax credit is determined using a detailed formula that incorporates the volume of beer sold, the type of beer, and the specific date ranges within the sales year. Non-draft beer sold up to July 31, 2025 receives a credit of $0.4999 per litre, while draft beer in that period qualifies for $0.3649 per litre. Starting August 1, 2025, higher per-litre credit values are applied, with non-draft beer earning $0.6987 per litre and draft beer $0.5447 per litre. The formula also adjusts the credit based on the overall production volume, introducing scaling factors that reduce the credit as sales volumes increase beyond certain thresholds. These factors—labeled as U, V, W, and X in the formula—progressively scale back the credit for larger producers to preserve the program’s focus on supporting genuinely small manufacturers. For instance, producers selling less than 4.9 million litres in a year receive the full benefit, while those selling up to 20 million litres face proportionate reductions. Additional formula components also weight the credit according to the mix of draft and non-draft beer sold.

Looking beyond the transitional year, the regulation introduces a permanent formula that applies to sales years beginning on or after March 2, 2026. Under this new structure, the credit calculation is streamlined but continues to distinguish between draft and non-draft beer, with fixed per-litre credit values of $0.6987 and $0.5447 respectively. The scaling system based on production thresholds remains in place, ensuring that the tax credit diminishes as annual output rises above 4.9 million litres and phases down further for brewers exceeding 7.5 million and 13 million litres. This approach continues to target the credit toward smaller-scale manufacturers, while ensuring larger producers who operate at a higher scale receive proportionally less benefit.

Overall, Ontario Regulation 167/25 modernizes the Small Beer Manufacturers’ Tax Credit by updating references, introducing transitional measures for the 2025–2026 period, and establishing a long-term framework beginning in 2026 that balances per-litre credit values with production-based scaling.

Ontario (167/2025) August 13, 2025
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