Day 552

My nascent career in TV over before it really began, it was back to the brewmaster classroom. In Human Resources: what is a a properly planned performance evaluation according to Management by Objectives (MBO)?

  1. Define job objectives
  2. Set employee goals
  3. Coach frequently
  4. Compare performance to goals
  5. Reward goals achieved

Of course, just following this doesn’t guarantee that it will work. If an evaluation finds deficiencies but there’s no plan for employee training, then there won’t be any improvement. If performance evaluation is limited to annual reviews, with no regular feedback the rest of the year, then the employee will have no idea if he or she is meeting goals set out in the last review. And the whole process needs consistency throughout the company, strong managerial skills, and commitment to the process from upper management.

In between classes, I headed over the to the Teaching Brewery to hand in my final report on my specialty brew. There I learned the sad news–the shive (the large plug) in my 20-litre cask of Blackheart had suddenly popped out, the result of a build-up of too much internal pressure. Although I had carefully calculated the amount of priming sugar to use, probably some unfermented sugar left after the original fermentation combined with the priming sugar to provide too much food for the yeast. Too much food equalled too much CO2. Too much CO2 popped the shive out, sending about half of the cask’s contents all over the floor. Although the assistant brewmaster immediately hammered in a replacement shive, all the CO2 in the cask was lost–when we finally tap the cask, the beer that is left will be as flat as day-old Coke.

Alas. This is what keeps brewmasters awake at night.

Back to class. Two people from the Ontario Ministry of Finance visited Beer Industry to explain all about the beer tax that is due on each and every litre of beer we sell . (Well, almost every litre. It turns out that microbrewers–those that produce less than 50,000 hectolitres of beer a year–can get an annual tax exemption for some of the beer given away at special events for promotional purposes. But I digress…)

We covered the tax rates, which differ for breweries of different sizes. We also covered the various taxes:

  • a basic tax (which has different rates for draught versus bottled/canned beer)
  • a volume tax
  • an environmental tax (exempt if the beer is in a refillable container and the brewer intends to refill the container).

These are collected on each litre of beer sold via The Beer Store, to licensees or in the brewery’s own retail store. (However, beer sold to the LCBO is exempt from these taxes, since it collects taxes directly.)

We also studied the beer tax form each brewer has to fill out every month, line by line.

Filled with new-found tax knowledge, we were given a simple practice exercise: The fictional XYZ Brewery has just started up, and in its first month, it has produced 10 hectolitres (1000 litres) of beer. It has sold some of that beer to

  • The Beer Store (100 six-packs of 355 mL cans, 100 six-packs of refillable 341 mL bottles, and ten 20L kegs)
  • a nearby bar (100 six-packs of refillable 341 mL bottles and ten 20L kegs)
  • The LCBO (100 six packs of refillable 341 mL bottles)

How much tax does XYZ now owe?

Clearly, this was harder than it looked, since very few (if any) students got the right answer. I failed to notice that the bottles were 341 mL but the cans were 355 mL. That 14 mL may not sound like a big difference, but it becomes significant when thousands of litres are involved. Others forgot to add the environmental tax on the non-refillable cans or didn’t properly differentiate between draught and non-draught. Still others forgot to exempt beer sold to the LCBO.

So here are the correct calculations (I think), using tax rates for microbreweries:

  1. Volume of non-draught beer (i.e. bottles & cans): 622.2 L
  2. Volume of draught beer: 400 L
  3. Total volume: 1022.2 L
  4. Number of non-refillable cans = 600
  5. Basic tax  on non-draught = $0.2403/L x 622.2 L= $149.52
  6. Basic tax on draught = $0.2161/L x 400 L = $86.44
  7. Volume tax = $0.1760/L x 1022.2 L = $179.91
  8. Environmental tax (cans only) = $0.0893/can x 600 cans = $53.58
  9. Total tax = $149.52 + $86.44 + $179.91 + $19.02 = $469.45

To save wear and tear on your calculator (since this has to be done each and every month), the Ministry provides interactive on-line forms that automatically calculate the taxes you owe once you have input the various volumes of beer sold.

And then you can sadly contemplate life as you consume one of your very taxed beers.

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One Comment on “Day 552”

  1. Jen Nad Says:

    Oh no! Who knew that Blackheart would turn out to be such a heartbreaker!!

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