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 Please be aware that any statute or policy referred to in this letter may have been superseded.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-0012, January 2004
Thank you for your facsimile of September 29, 2003 regarding the application of Ontario retail sales tax
(RST) to various lease-related fees.
This interpretation is based on the information provided and which is conveyed in the "Understanding of
Facts" portion of this ruling. Please review the information for its completeness and accuracy. If it is
determined that the information is incomplete or inaccurate, this interpretation will not be binding. In the
event that our understanding of the facts is incomplete or inaccurate, please notify the undersigned, in
writing, so that we may reconsider our opinion.
Understanding of Facts
It is our understanding that Company A is a leasing division of Company C located in Saskatchewan and
has various types of leased assets in the province of Ontario. Company A has asked about the
application of RST to the following lease-related fees:
- rewrite fees charged to cover the documentation and administrative costs associated with the
reset up of an existing lease
- assumption fees charged to cover the documentation and administrative costs of having an
existing lease assumed by a different lessee
Legislation and/or Administrative Policy
An item that is taxable when sold to the end user is also taxable when rented or leased. In some cases,
the total rental amount may be comprised of various separate charges which together form the total
charge for the rental or lease.
Certain of these charges are taxable even if segregated on the invoice, including:
- charges to install, assemble, or dismantle goods
- administration charges/fees
- collision damage waiver charges
- delivery and handling charges
- finance or interest charges
- maintenance, repair, or damage charges
- service contract charges
- surcharges based on the length of the rental, distance travelled by vehicles, etc.
- tax for fuel conservation
Analysis and Conclusion
The fair value of a lease combines the value of the equipment or goods being rented and the cost of other
related charges, including rewrite fees and assumption fees, regardless of whether these fees are paid up
front or included in the financed cost.
Company A is, therefore, required to charge, collect, and remit RST on costs associated with rewrite and
assumption fees unless the lessee is eligible for an exemption from RST on the lease of the equipment or
goods and provides Company A with the proper documentation (Purchase Exemption Certificate, Cab
Card, etc.).
