There was a line in a document last year about removing excise tax for three years, but she did not know who collated it.
It has sparked calls from health experts for the coalition Government to disclose any tobacco industry links it has and for calls from the Labour Party for Costello to be sacked.
In a statement, Prime Minister Christopher Luxon said the Cabinet Office was aware of his sister-in-law’s connection.
“Yes, my sister-in-law works for a tobacco company. I have never discussed tobacco policy with her.”
Luxon said he was confident he has complied with the Cabinet Manual.
- RNZ