staff used the amount of tobacco listed as “other tobacco” on the
 After this proceeding was commenced, the amount of the
demand was reduced to $1,397,000 when ministry staff determined that some of the tobacco used in the original calculation
was not UFCT.
 The appellant took the position that the minister’s demand
for security was unlawful, because no tax was payable on
tobacco produced for export or for sale on reserves. When the
issue was not resolved, the appellant brought an application
for judicial review. On March 31, 2016, the Divisional Court
dismissed the application. This court granted the appellant
leave to appeal.
 Before turning to the reasons of the Divisional Court, I will
explain and summarize the relevant provisions of the TTA.
C. The TTA
 The TTA imposes a tax on consumers of tobacco products.
As the Divisional Court noted, all consumers in Ontario are
required to pay the tax on tobacco products they purchase, with
one exception: tobacco products sold to “Indians” on a “reserve”
for use by “Indians” are not subject to the tax. This exemption
exists by virtue of s. 87(1)(b) and (2) of the Indian Act, which
provide that “the personal property of an Indian or a band situated on a reserve” is exempt from tax and no “Indian” is subject
to tax in respect of the possession or use thereof.
 Although the tax is paid by the consumer at the time of
purchase from the retailer, the tax is actually collected from
manufacturers, who remit the tax on their products, collecting
it as part of the price charged to wholesalers, who in turn charge
the cost as part of the price they charge to retailers. The retailer,
in turn, charges the tax as part of the price charged to the
 The TTA regulates the manufacture, distribution and
retail sale of tobacco products in order to collect the tax. As the
Divisional Court noted, at para. 14 of its reasons, “[t]he TTA
regulates the entire tobacco industry in Ontario with a view to
ensuring that the taxes payable under the TTA are collected and
remitted to the Minister”.
 As part of the regulatory system established by the TTA,
each party in the distribution chain ; manufacturers, wholesalers and retail dealers ; is required to obtain a permit or registration certificate and to account for its tobacco supplies. This
includes entities, like the appellant, whose tobacco is not subject
to taxable sale in Ontario because it is intended for export or