Contraband cigarettes and tobacco: taxes, penalties and fines

Revenu Québec and the Sureté du Québec are extremely active in the fight against contraband tobacco.  This is due to the fact that the illegal tobacco sold on the native reserves is far cheaper than legal tobacco thus creating a strong temptation to resupply on the reserves.

The Quebec government, in its pursuit to raise revenues and balance the books, will do everything in its power to collect taxes owed from taxpayers and apply penalties and fines.

If you are stopped by the police and you happen to be carrying contraband tobacco, what happens next is crucial and can potentially cost you tens of thousands of dollars.

Remember:

  • The police cannot search your car unless you are under arrest
  • Bags of tobacco in plain view and a strong smell of tobacco can be used as grounds for your arrest and a subsequent search of the vehicle
  • You have the right to remain silent and speak to a lawyer
  • ***Never admit or make any written or verbal statements on the spot, let your lawyers take care of the rest

On top of the penal or criminal accusations, Revenu Québec will also reassess you for taxes owing on the tobacco.  This is where things can get tricky since Revenu Québec will base this assessment on the seized tobacco and will make assumptions as to how much more tobacco you “could have” sold during the year and the years prior.

That’s not all, Revenu Québec can then reassess you for undeclared business income from the sale of contraband tobacco, which includes interest and penalties equal to 50% of the income tax owing.

Needless to say, the results can be catastrophic for anyone.

As an example, if you are stopped with 10 cartons of cigarettes, it is not uncommon to see Revenu Quebec assume that you have been selling 10 cartons of cigarettes a week for the last few months or few years.

All of this can be contested and justifies the services of an experienced lawyer in this field.

For a free consultation, please fill out the following online questionnaire

Sirois & Cohen

438-386-4223