RST Guide 517, March 2001
- The information in this Guide explains how Retail sales tax (RST) applies to portable or relocatable buildings for non-residential use. This Guide replaces the previous version dated November 1996.
Supply Only Sales
Suppliers must charge RST on the total selling price of a building that is supplied without installation or remains tangible personal property when installed. Tangible personal property refers to free-standing items which can be seen, weighed, measured, felt or touched, or that is in any way perceptible to the senses. The selling price includes any charges for delivery, installation, and any service connections. RST does not apply to charges for site preparation if these charges are shown separately on the customer's billing.
Supply and Install Sales
Buildings
The sale of a building, when installed, is considered to be a sale of real property only if all of the following conditions are met:
- the building is installed by the supplier or by the supplier's subcontractor on a permanent foundation
- the building is installed on land owned by the customer, and
- the customer certifies that, to the best of his or her knowledge, the building will not be relocated after the date of installation
If the above conditions are met, the supplier or the supplier's subcontractor must pay RST on the cost of the building and on any materials used to install it. The cost is the purchase price of the building if bought ready made or the manufactured cost (materials, labour and overhead) if made by the contractor installing the building. If the contractor's total manufactured cost is less than $50,000 in a fiscal year, RST is payable only on the cost of all materials. For further details on manufactured cost, see RST Guide 401 - Manufacturing Contractors.
If the above conditions are not met, the sale of the building is considered to be a sale of tangible personal property regardless of the degree of affixation to the land. The supplier must charge RST as outlined under the above heading, "Supply Only Sales".
Relocatable Classroom Modules
A contract to supply and install relocatable classroom modules for a school board is considered to be the supply and installation of tangible personal property that becomes real property upon installation. School boards do not have to certify that the modules will not be relocated after installation of the facility. The contractor is still responsible to account for RST on manufactured cost even though the module may be installed on land that is not owned by the school board.
School boards may send out tenders for a project. Companies bidding on these contracts must pay or account for RST on the cost of the modules and on any installation materials used at the job site. RST is payable on the cost of the modules, either on the purchase price if it is bought ready made or on the manufactured cost if it is made by the contractor installing the modules. If the contractor's manufactured cost is less than $50,000 in a fiscal year, RST is payable only on the cost of all materials.
Once the modules are transported to the job site and the contractor commences installing the modular units, the contractor is considered to be a construction contractor and must pay RST directly to suppliers for any materials and equipment purchased for use at the job site.
Note: RST must not be charged on the selling price of a building or module that is considered to be real property when installed. The RST payable by the supplier or supplier's subcontractor on the building or module is part of the cost used to determine the final contract price. RST must not be shown on the customer's billing.
Portable Classrooms
Relocatable classroom modules do not include portable classrooms. The application of RST to portables is the same as outlined under the above heading, "Buildings".
Rentals
Buildings
The rental of a portable or relocatable building that is used for non-residential purposes is considered in all cases to be the rental of tangible personal property. In this case, the supplier is required to collect RST on the rental fee, including any charges for delivery, installation, removal, and service connections. RST must also be charged on the amount paid by the lessee to exercise an option to purchase.
The lessor is not required to pay RST on the purchase or manufacture of buildings used exclusively for rental purposes.
Ice Fishing Huts
Those who are in the business of renting ice fishing huts must pay RST directly to their suppliers on the huts if bought ready made or on the materials and equipment used to build the huts. RST must also be paid on materials and equipment used to maintain and install the huts.
RST should not be charged on the rental of the huts to the customer.
Portable Sanitary Toilets
A portable sanitary toilet service usually combines the maintenance and cleaning of the toilets with the provision of the unit. This is considered to be the provision of a non-taxable service. Normally, these units are provided for a specific event or occurrence. The provider of this non-taxable service must pay RST on all materials and equipment, including the unit, used to provide the service.
Larger washroom units may contain sinks and showers and are normally rented to a specific customer for a longer period of time (a month or longer). The customer may also contract with the provider of the washroom unit for the daily or weekly cleaning and pumping service. In this instance, RST is to be charged and collected on only the rental portion of the washroom unit provided the charge for the cleaning and pumping service is shown separately on the customer's billing. If the charge is not shown separately, the total charge is taxable. Repairs made to this rental washroom unit are exempt from RST.
The rental of any sanitary toilet or washroom unit without the cleaning, daily maintenance and pumping service, is considered to be the rental of tangible personal property. RST must be charged on the total selling price or rental charge, including delivery, installation and set-up charges, and any service connections.
Repairs
On-site repairs of buildings, modules, or portables are considered to be repairs to real property regardless of the RST status of the building at the time of installation. The repairer must pay RST on the cost of the materials used in the repair. Exceptions to this rule are:
- buildings rented for non-residential purposes,
- rentals of the larger washroom units,
- and portable sanitary toilets rented without the cleaning and maintenance services.
These transactions are taxable rentals of tangible personal property items. RST does not apply to the repairs of these items since RST is to be collected on the rental charge.
For More Information
The information contained in this publication is only a guideline. For more information, please contact the Ontario Ministry of Revenue at 1 866 ONT-TAXS (1 866 668-8297) or visit our website at ontario.ca/revenue.
© Queen's Printer for Ontario, 2001
ISBN 0-7794-0901-9
