Information and Disclaimer
This interpretation letter was issued based on the specific circumstances or situation of a taxpayer or vendor and the law and tax policy in effect at the time the ruling was issued. Specific facts relevant to your situation may change the application of the tax. In accordance with the Freedom of Information and Protection of Privacy Act, all confidential and identifying information has been removed from this interpretation letter. Please be aware that any statute or policy referred to in this letter may have been superseded. Where a letter contains links to a publication, the link is to our current publication on that subject, regardless of the date that the ruling was originally issued, and the current publication may not be reflective of the information originally provided. In no event shall the Government of Ontario be liable for any damages whatsoever arising out of, or in connection with, the use of the information contained herein.
Interpretation Letter LR-0001, April 2000
We refer to your letter dated March 16, 2000 and our telephone conversation of March 23, 2000 regarding
the application of Ontario retail sales tax (RST) to a mobile generator purchased for rental purposes.
Understanding of Facts
It is our understanding the mobile generator will be rented on a "supply only" basis for a minimum three (3)
year period. The renter will have the unit installed on cement blocks. It will be plugged into an electrical
wall receptacle. The battery charger, engine coolant heater and the unit's alarms are hard wired into the
building. The unit must be returned to Company A at the end of the rental period.
Legislation and/or Administrative Policy
There are two types of property for RST purposes, tangible personal property (TPP) and real property.
TPP refers to free standing items. Real property means land and any items permanently attached to land.
Fixtures are items, which upon installation, are permanently attached to real property. Permanently
attached means bolted, lagged, or in some other fashion permanently affixed. In some cases items are
considered to be fixtures if they are affixed to land by virtue of their size, weight, and cannot be moved
without disassembly.
Where a person supplies and installs items that remain free-standing TPP, the person must charge,
collect, and remit RST on the total selling price of the items including charges for delivery and installation
unless the customer is entitled to an exemption and provides a properly completed purchase exemption
certificate.
Where a real property contractor supplies and installs items as fixtures to real property, the contractor is
considered to be the end-user of these items and is liable for RST on their cost of the items. No RST is to
be charged to the customer on real property contracts.
The installation, maintenance or service charges for items that remain TPP after installation are subject to
RST. The installation, maintenance or service charges for items that become fixtures attached to realty
after installation are not subject to RST.
Analysis
The generator is rented on a "supply only" basis at the time the rental agreement is entered into and it is
intended that the generator be returned at the end of the rental period. We consider this to be a rental of
TPP. Company A may purchase the mobile generator on wheels exempt from RST as inventory to be
rented to others. Company A must charge, collect and remit RST on the periodic rental payments. The
fact the renter removes the wheels and sets the mobile generator on cement blocks does not change this
ruling.
Conclusion
Based on the facts provided, the mobile generator rented to your customer is TPP at the time the rental
agreement is entered into. RST must be charged on each and every rental payment related to the rental
of this mobile generator.
We are enclosing Sales Tax Guides 206 - Real Property and Fixtures and 502 - Rentals for your
information.
