Vehicles Powered by Alternative Fuels

RST Guide 702, March 2009

• This Guide provides information about the Retail Sales Tax (RST) rebate available to purchasers of vehicles powered by alternative fuels, including hybrid electric vehicles (HEVs). This Guide has been rewritten and replaces the previous version dated August 2006.
• For general RST information that applies to all businesses such as registration for vendor permits, general exemptions, and how to charge and collect tax, see Small Business Pointer 901 – The Basics of Retail Sales Tax.

Qualifying and Non-Qualifying Vehicles

Alternative Fuel Vehicles

Persons who purchase or lease new or used vehicles that are licensed under the Highway Traffic Act (e.g., cars, buses, trucks, and vans) may qualify for a rebate of RST if the vehicles operate or are converted to operate:

• exclusively on electrical energy
• exclusively on propane, natural gas, ethanol, methanol or other manufactured gas; or
• as dual-powered vehicles (i.e., vehicles that can operate exclusively on an alternative fuel described above and can also operate exclusively on gasoline or diesel fuel).

A rebate of RST may also be obtained on the purchase of conversion kits and the labour to install them.

A rebate is not available on vehicles using a mixture of an alternative fuel described above and gasoline or diesel fuel. This includes vehicles that operate on a blend of ethanol and gasoline such as E10 (10 per cent ethanol and 90 per cent gasoline) or E85 (85 per cent ethanol and 15 per cent gasoline).

Hybrid Electric Vehicles

Persons who purchase or lease new or used HEVs such as multi-purpose passenger vehicles, passenger cars and trucks may qualify for a rebate if the vehicle was manufactured to operate with:

• power from an electric motor and an internal combustion engine
• regenerative braking designed to recover the energy released while slowing down or stopping, and
• an energy storage system such as a battery, ultra capacitor or flywheel.

A rebate is not available for hybrid electric buses or for vehicles converted to hybrid electric power after the vehicle's date of purchase.

The rebate does not extend to maintenance, service or warranty contracts.

Tax for Fuel Conservation

In addition to the 8 per cent RST, the tax for fuel conservation (TFFC) paid on new passenger cars or new sport utility vehicles, bought or leased, may be rebated if the vehicles operate or are converted to operate exclusively on an alternative fuel.

Rebates are not available for the TFFC paid on dual-powered vehicles as described above. For more information see RST Guide 513 - Tax for Fuel Conservation.

Limitations

Dollar Limits

A rebate of the 8 per cent Retail Sales Tax (RST) paid on vehicles powered by an alternative fuel, including RST paid on any qualifying conversion costs, is limited to:

• $750 for propane vehicles
• $1,000 for vehicles powered by electrical energy or an alternative fuel, other than propane
• $1,000 for HEVs delivered to purchasers from May 10, 2001 to March 23, 2006 inclusive
• $2,000 for HEVs delivered to purchasers from March 24, 2006 to March 31, 2012 inclusive.

Purchasers of alternative fuel buses, other than hybrid electric buses, may apply for a rebate of the full amount of RST paid.

A rebate of RST may be obtained on the purchase price of vehicles, conversion kits and installation labour if the conversion occurs within 180 days of the vehicle's date of purchase. If the conversion is not completed within 180 days of the date of purchase, only the RST paid on the conversion kit and installation labour charges may be rebated. Rebate applications must be received within four years from the date the RST was paid.

Long-Term Leases

Persons entering into lease agreements on eligible vehicles may qualify for the rebate provided the lease period is 12 months or more. Rebate claims for leased vehicles are subject to the dollar limits noted above. Lessees may file one rebate claim per leased vehicle per year until the maximum rebate limit is reached.

More Information

Telephone

• 1 866 ONT-TAXS (1 866 668-8297)
• 1 800 263-7776 for teletypewriter (TTY)

Written Interpretation

To obtain a written interpretation on a specific situation not addressed in this publication, please send your request in writing to:

Ministry of Revenue
Tax Advisory Services Branch
Retail Sales Tax Section
33 King Street West, 3rd Floor
Oshawa ON L1H 8H5

Disclaimer and References

The information contained in this publication is provided only as a guideline and is not intended to replace the legislation.

References

• Retail Sales Tax Act, clauses 48(3)(g),(h) and (i)
• Regulation 1012 under the Act, sections 19 and 20
  

© Queen's Printer for Ontario, 2009

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Instructions for Applying for a Rebate

Completing your Application

Mail your signed application, with the required documents to:

Ministry of Revenue
Retail Sales Tax Refund Unit
PO Box 646
Oshawa ON  L1H 8X2

To claim a rebate, complete the attached application return it to the address indicated on the top of the application form with the relevant documents outlined below.

1. For Vehicles Manufactured to Operate on an Alternative Fuel

1. If bought from a dealer, your original purchase contract (bill of sale) showing the purchase price, the date of purchase and the amount of RST paid, or

   If bought privately, your original Motor Vehicle Transfer form (MV 1) you received when the RST was paid at a Driver and Vehicle Licence Issuing Office

2. A copy of your vehicle registration
3. For previsously owned vehicles, a signed statement from the licensed mechanic who issued the Safety Standards Certificate, on company letterhead, stating the type of power used to operate the vehicle when the inspection was done.

2. For Vehicles, other than Hybrid Electric Vehicles, Converted to Operate on an Alternative Fuel

In addition to the documents required under 1 (a) and (b) above:

1. Your original conversion invoice showing the date the conversion was completed
2. Proof that RST was paid (e.g., a copy of the cancelled cheque, a signed receipt, or a copy of the finance agreement)
3. A description of the fuel system, written by the person who made the conversion.

3. For Leased Vehicles

1. Your original long-term lease contract setting out the lease payment schedule
2. Proof that RST has been paid (e.g., cancelled cheques, receipts or a letter from the lessor stating the amount of RST paid for the period covered by your claim).

The date for a long-term lease is the date the lease started. Time limits apply.

4. For Conversions Only (completed outside the 180 day time limit)

1. The documents required under 1(b), 2(a) and 2(b) above.

If requested, original documents will be returned after the claim has been processed. Please allow six to eight weeks for the ministry to process your application. Missing documents or information will delay the processing of your claim.