Rentals and Services Provided by Special Events Production Company

Notice to the reader: For Retail Sales Tax (RST) – On July 1, 2010 the 13 per cent Harmonized Sales Tax (HST) took effect in Ontario replacing the existing provincial Retail Sales Tax (RST) and combining it with the federal Goods and Services Tax (GST). As a result, RST provisions described on this page and in other publications ended on June 30, 2010.

Effective July 1, 2010 this publication was archived for RST purposes only. Use caution when you refer to it, since it reflects the law in force for RST at the time it was released and may no longer apply.

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 Please be aware that any statute or policy referred to in this letter may have been superseded.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-0003, September 2000

Thank you for your letter of July 11, 2000 concerning the application of Ontario retail sales tax with respect to your business activities. We apologize for the delay.

Understanding of Facts

Company A enquired as to the correct application of Ontario retail sales tax on the following:

When billing a client for production services (signs, name badges, multimedia, video, promo items, print, custom sets), should retail sales tax and GST be applied?
When renting equipment to a client, should retail sales tax and GST be applied?
When providing catering or decor for a client, should retail sales tax and GST be applied?
When providing staging services, ie., rental of audio/visual equipment which is accompanied with a technical operator, should retail sales tax be applied to the equipment rental and labour portion of the invoice?
If an event takes place outside of Ontario, or if a production is shipped out of Ontario, should retail sales tax be applied. Company A enquired as how retail sales tax should be applied with respect to a cross-country tour ie., 20 cities across Canada where 3 of the cities are in Ontario. Should retail sales tax be applied on a pro-rated basis ie., 8% of the contract price x 3/20?

During our telephone discussion of August 10, 2000, Company A indicated that, with respect to the rental of the audio/visual equipment, 50% of the time it rents the equipment only and the other 50% of the time the equipment is rented with an operator. Company A understands that retail sales tax is applicable on the rental of the equipment only, however, where a technical operator is provided with the equipment, retail sales tax is not to be applied. Company A enquired as to whether it should pay retail sales tax on the equipment at the time of purchase or not. The same equipment is used for both types of transactions ie., both with and without an operator.

Legislation and/or Administrative Policy

We are unable to provide answers with respect to Company A's questions concerning GST. Please contact the local Canada Revenue Agency office for GST enquiries.

Before we address each of the scenarios outlined in Company A's letter, we are providing some general information.

The installation and dismantling, painting, wallpapering and decorating for television or film sets is the provision of a taxable service unless the client provides a properly completed purchase exemption certificate. Film production companies may purchase props, sets, costumes and any related jewellery, cosmetic articles or materials, wigs, toupees, hairpieces and other related items, cameras, film stock, lights, sound, recording and editing equipment exempt from retail sales tax as exempt production equipment used primarily and directly in production. Companies claiming this exemption must provide a
properly completed purchase exemption certificate.

The rental of audio/visual equipment with an operator, is the provision of a non-taxable service. As such, no retail sales tax should be charged to the customer. The provider of a non-taxable service must pay retail sales tax to suppliers on its cost of materials and equipment purchased to provide the service.

Catering services are taxable to the end consumer provided the total charge is in excess of $4.00. Anyone purchasing prepared foods for resale purposes may buy them exempt from retail sales tax by providing a properly completed purchase exemption certificate to the supplier.

The charges to the customer for decorations are taxable at 8% if the customer retains possession of the decorations after the event. If the customer does not retain possession of the decorations, retail sales tax should not be charged to the customer. In this case, the decorations provider must pay/account for retail sales tax on their cost of the decorations.

Retail sales tax applies at the rate of 8% on any separate charges for the rental of tables, chairs, flatware, glassware, cutlery, tablecloths, etc. Where the customer is billed separately, the vendor may purchase the items exempt from retail sales tax by providing suppliers with properly completed purchase exemption certificates. Retail sales tax does not apply to any non-returnable paper napkins, cups, straws, and other disposable items used in the serving of catered meals or alcoholic beverages.

Analysis and Conclusion

We will now address each item separately for ease of reference.

1. When billing a client for production services (signs, name badges, multimedia, video, promo items, print, custom sets), should retail sales tax and GST be applied?

The installation and dismantling, painting, wallpapering and decorating for television or film sets is the provision of a taxable service unless the client provides Company A with a properly completed purchase exemption certificate.

Where Company A supplies stage sets and decorations (e.g. curtains, side drops, etc.), printed matter, signs, promo items, etc., the specific charge would be subject to retail sales tax unless the client claims an exemption and provides a purchase exemption certificate. Company A may purchase these items exempt from retail sales tax by giving properly completed purchase exemption certificates to suppliers.

2. When renting equipment to a client, should retail sales tax and GST be applied?

The rental of equipment is taxable to the customer. Company A must charge retail sales tax on these rentals unless the customer provides a purchase exemption certificate.

Where Company A rents equipment with an operator, this is the provision of a non-taxable service. As such, no retail sales tax should be charged to the customer. As the provider of a nontaxable service, Company A must pay retail sales tax to suppliers on its cost of materials and equipment purchased to provide the service.

3. When providing catering or decor for a client, should retail sales tax and GST be applied?

With respect to the catering services, Company A should purchase the catering services exempt from the caterer by providing a purchase exemption certificate. Company A should charge retail sales tax on the re-billing to its client for the catering, where the charge is in excess of $4.00 (GST excluded).

In this case, Company A must pay/account for retail sales tax on their cost of the decorations.

Retail sales tax applies at the rate of 8% on the rental of tables, chairs, flatware, glassware, cutlery, tablecloths, etc. to any separate charges to the customer for these items. Where the customer is billed separately, Company A may purchase the items exempt from tax by providing suppliers with properly completed purchase exemption certificates. Retail sales tax does not apply to any non-returnable paper napkins, cups, straws, and other disposable items used in the serving of catered meals or alcoholic beverages.

4. When providing staging services, i.e., rental of audio/visual equipment which is accompanied with a technical operator, should retail sales tax be applied to the equipment rental and labour portion of the invoice?

Where Company A rents audio/visual equipment with an operator, this is the provision of a nontaxable service. As such, no retail sales tax should be charged to the customer. As the provider of a non-taxable service, Company A must pay retail sales tax to suppliers on its cost of materials and equipment purchased to provide the service.

5. If an event takes place outside of Ontario, or if a production is shipped out of Ontario, should retail sales tax be applied. Company A enquired as how retail sales tax should be applied with respect to a cross-country tour ie., 20 cities across Canada where 3 of the cities are in Ontario. Should retail sales tax be applied on a pro-rated basis ie., 8% of the contract price x 3/20?

If an event takes place outside of Ontario, no retail sales tax should be charged to Company A's customer. Also, where a production is shipped out of Ontario directly by Company A, retail sales tax is not required to be charged. In the scenario described above, retail sales tax is applicable on all taxable goods and services remaining or performed in Ontario. Charges for the goods shipped/delivered within Ontario and for taxable services rendered in Ontario must be separated from those for goods or services that are shipped/delivered or rendered outside of Ontario. Otherwise the total charge is subject to retail sales tax.

Rental of the audio/visual equipment

With respect to audio/visual equipment purchased for rental with and/or without an operator, one must look at the primary use of the equipment. If the rental of the audio/visual equipment is rented primarily without an operator, then you may purchase this equipment exempt from retail sales tax by providing your supplier with a properly completed purchase exemption certificate. Retail sales tax must be collected on the rental charges from Company A's clients unless they provide Company A with a purchase exemption certificate. If this same equipment is also used by Company A to render a non-taxable service (ie., rental with an operator), Company A must account for retail sales tax at that time of its cost to use the equipment at that time (ie., regular rental charge without an operator less mark-up). However, if the rental of the audio / visual equipment is rented primarily with a technical operator, retail sales tax is not to be applied since Company A is providing a non-taxable service. Retail sales tax is required to be paid on the equipment at the time of purchase even if this same equipment is occasionally rented without an operator.