Interesting forum indeed! Congratulations for the administrators supporting it – people from the liquor industry can definitely benefit from this blog. I quickly want to respond to the question of the European Man.
European Man, apparently you have taken things in details, and this is absolutely normal considering the Liquor Industry in BC, which at first seems to be a “little” complicated. Let me shortly tell you from my experience what happens.
I use the services of Container World – they provide services such as freight forwarding, warehousing and private distribution. When my container arrives at port of Vancouver, then a Container World truck transports (inbond) the container to the Sufference Bond Warehouse (the one you pointed out in section 2). Then CW prepares manifest and Canada Customs Invoice (CCI) and sends it to BCLDB. When BCLDB receives those documents, clearance is initiated. At the time of the clearance the BCLDB pays all duties and taxes, and basically the product is excise duty deferred, as well as transferred to the CW Excise Warehouse. Then at the end of the month, BCLDB will charge you back for all duties and taxes. So the answer for you question – at the end of the month you have to pay $6480 + $171.36 = $6651.36 (in your particular scenario). Ofcourse depending on your reporting HST period, you will receive the difference between the HST that you paid, and HST that you collected. In your scenario, the HST that you paid – $6480 + $18.36 (you forgot to add the HST charged on the Custom Duty) = $6498.36 minus HST that you collected $295.09 = $6203.27 – this is the refund that you should receive from Canada Revenue Agency – again depending on your reporting period. When BCLDB requires your products (after they received PO from licensees such as private liquor stores, restaurants, pubs and etc.,) they issue EPO to your warehouse, and as a result they ship the product from CW warehouse, to the BCLDB warehouse for distribution to licensees.
If you want to go into more details, I can recommend you a blog on How To Register a Business and Import Liquor In British Columbia. The address is:
http://www.radevtrade.com/howtoimportliquorinbc/
It has helpful tips and suggestions, regarding the liquor industry in British Columbia

Hope I helped!

Best Regards

This is really an interesting forum with very helpful comments that are coming right from the real practice and not from theoretical guidelines and documents provided from the LDB. I “might” be interested in trying to import wine and spirits here in BC, but I still haven’t taken my decision…. it really seems…weeeell protected for the domestic alcohol industry which is understandable – any country in the world has custom duties, taxes, mark-ups, and so forth to protects its domestic industries. At the same time statistics say that BCLDB made $460.5 million on imported wines for 2009 in comparison to $398.2 million for 2008, which is a whoooole 15.7% growth.
Now I would like to ask you a question which for some of you would be probably self-explanatory, but nevertheless I would appreciate very much, any answers or comments you might have.

Ok, here we go… first I want to list the whole import process that is described in one of the BCLDB guidelines under option B(supplier sells to distributor and distributor resells to LDB):

1. BCLD issues PO to distributor (registered for GST)
2. Distributor arranges for shipment of Product to Sufferance Bond Warehouse in Commercial Warehouse in B.C. BCLDB acquires notional title of product upon physical arrival in BC.
3. BCLDB issues request for customs clearance (within 21 days for spirits, 40 days for wine). Product transferred from Sufferance Bond to Excise Warehouse. BCLDB acts as Importer of Record paying GST and Customs Duty (Product Excise Duty deferred) to the CRA.
4. BCLDB charges the GST (on Prime Cost & Customs Duty) and Customs Duty back to the Distributor.
5. BCDLB issues Excise PO to Distributor. All costs (product, customs duty, freight allowance, domestic charges) are subject to GST where applicable.
6. Product shipped from Commercial Excise Warehouse to BCDLB Excise Warehouse / BCDLB takes physical possession and assumes risk of loss of Product.
7. BCDLB pays an amount for the Product to the Distributor. The amount paid comprises the following:
• Prime Cost (original PO amount including delivery to Canada)
• Customs Duty
• Domestic Charges (costs incurred in Canada – warehouse costs, handling, agents profits)
• Freight Allowance Credit
• GST (on prime cost, customs duty, domestic charges, freight allowance credit) where product owner has provided GST # to the BCDLB.
8. BCDLB removes Product from BCDLB Excise Warehouse for delivery to retail outlets and pays Excise.

My question relates to subsection 4, and also I’ll use one of their scenario examples so I can base my question on it.

Lets say I import 900 12 bottle cases for the prime cost of say $60:

900 x $60 = $54 000
HST @12% = $6480
Gross: $60 480
————————–
Customs Duty
$0.17 (according to the new pricing simulator) x 900 cases = $153
HST @12% = $18.36
Gross: $171.36

Then Customs Chargeback (for the distributor) invoice prepared by BCDLB on customs clearance: Customs Duty plus HST on prime cost or in our case: $6480 + $171.36 = $6651.36

Then finally we sell let’s say 30 cases:

Pime cost – $60 x 30 = $1800 – HST on that = $216 – gross = $2016
Customs Duty – $0.17 x 30 = $5.10 – HST on that = $0.61 – gross = $5.71
Freight All – 0.40 (average per bottle from Europe) x 360 (30 cases x 12 bottle) = $144 HST on that = $17.28 – gross = $161.28
Domestic Charges – 17$ (roughly including warehouse, insurance and agent’s commission per case) x 30 = $510 – HST on that = 61.2 – gross = $571.20

OR

Total amount: $2459.10
Total HST amount received from the sale: $295.09

AND HERE MY QUESTION COMES. Do we have to pay this GROSS amount of HST which is $6480 right after BCLDB prepares the chargeback invoice (like at the end of the month)? OR we pay off this amount after each sale of our products – in this case we received $295.09 from the sale of 30 cases, so we apply this HST amount received of $295.09 to the HST amount of $6480 ($295.09 – $6480 = $6184.91 left) paid by LDB?

Thanks in advance to all of you that took the time to answer my question!

Cheers!

Bryan, I agree that we should have gotten a break, but they seized the opportunity.

As ridiculous as it is from where I’m standing, I am certainly glad I’m not on the restaurant liquor-ordering side of things. From what I can ascertain you guys are really getting the worst of it.

As someone who does regular ordering for a private store, I can definitely vouch for the lack of care and (sometimes) incompentency of some of the LDB employees. Case in point, when dealing with the LDB regarding a couple of returned bottles from customers of my store who gave me numbers for the LDB employees to call to verify that they had indeed returned said bottles, I was told by an LDB employee that I was being denied my return because they could not get ahold of the customer. As she then put it, “We will try to call them two… maybe three times. If we don’t reach them then we can’t verify whether or not someone actually bought this wine and returned it for a valid reason. BUT, feel free to complain via email!”

Uhh….. huh?
Remember how EVERY bottle of wine in BC comes from the LDB anyways? Literally? What do you mean you can’t take it back because you can’t verify it’s origins?
It’s the biggest joke I’ve ever heard. Also, the least funny joke I’ve ever heard.

As far as spec product ordering, the kicker of that hilarious system is when they sometimes just fail to place an order so after waiting for it for the requisite 10 days and then not receiving you are told to ‘maybe try to place your order again’ and then lo and behold, 10 days after that you get double the amount you wanted in the first place because when you placed your second order they found your first order and well, sorry…. you ordered it. So deal with it or pay the 10% ‘restocking fee’ that you must cough up when they have to inconvenience themselves by putting things back on the shelf. This on top of the amazing new ‘can’t buy more then 6 bottles without placing an order and waiting 48 hours’. It is absolutely the worst customer service I have ever heard of. Consistently mind boggling.

And kudos to you guys for bringing attention to the amount of bullshit we have to deal with when involved with the LDB. As you can probably tell by my rant, I’ve been a frustrated buyer for awhile and it’s nice to know I’m not the only one.

I might as well keep compiling my rant here as I deal with issues related to the restaurant opening (tonight!)

Today I stopped by our second assigned store (Thurlow/Bute) to pick up one particular wine to get me thorough until more of our Specs arrive next week (because they usually take TWO WEEKS). There were 11 bottles of the wine on the shelf and I took 10. The manager at the store told me that he wouldn’t sell me 10 bottles and apparently a memo had gone out to licensees stating that for orders of over 6 bottles, you’d have to place an order (and wait the 48 hour turn around time). He told me he would only sell me 3 bottles. After I haggled with him and explained that the restaurant was opening tonight and I needed this wine to fill a hole on the list, he eventually agreed to sell me 5. He later told me that because they were a new store, the bigwigs were keeping a close eye on the store and a hole on the shelves wouldn’t look good. I’m not making this up. If it was a customer off the street, would they have denied the sale? Would a private store essentially refuse to take my money because it would make the shelf look empty? Hell no, they’d sell that wine and put something else there. Completely ridiculous.

Also, strangely enough, yesterday I received a call from a wholesale LDB employee verifying that I returned a bottle of corked wine to Kits Wine Cellar about a month ago. They explained that the retailer couldn’t get refunded for this bottle unless I verified – an example of little things they do to make it a little more difficult on private retailers as Aron mentioned above. 1st point: shouldn’t they just be happy for the fact that the vast majority of faulted bottles never make it back for return anyways and cut their losses. 2nd: that’s an insulting use of my tax dollars – paying someone to sit around and call people who returned faulted bottles all day. How about we pay 122% markup on wine instead of 123%, and you eliminate ridiculous jobs like those.

Naturally the fact that there is no discount for restaurants is absolutely comical. Restaurants take a lot of flack in the public eye because of high markups, but as Jake stated if we were in a normal place, they’d have a wholesale discount and would be able to make their points without the massive markups…

For those that don’t work in the industry, the extent of the evil the BCLDB brings is beyond simply the insane high prices. Delivery time for spec items is 2weeks – IF YOU’RE LUCKY. Furthermore trying to return faulty product is an exercise in jumping through many hoops. The shipping department makes an error on almost EVERY order they put out to licensees, on top of this when they notice the error, they don’t contact the customer, they wait for the customer to contact them (and presumably hope they don’t notice).
The overall sense is that there is an intentional attempt to make life difficult on private retailers, and in fact to discourage the public from shopping there (the handling of returns for example is vastly different at private stores than at a BCLDB store).

Cheers!