Signs Sales & Rentals

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 Please be aware that any statute or policy referred to in this letter may have been superseded.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-0013, February 2004

Thank you for your letter received on September 29, 2003 and our telephone conversation of October 14, 2003 regarding the application of Ontario retail sales tax (RST) to your business activities.

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 inaccurate or incomplete, please notify the undersigned, in writing, so that we may reconsider our opinion.

Understanding of Facts

You are the proprietor of Company A and sell signs and sign products which you may or may not install. You also rent signs to customers for the purpose of advertising. You indicated that you currently charge and collect RST on the signs that are sold and that are rented. You have requested a written ruling advising you of the correct application of RST to your sales. We will address your questions in the Analysis and Conclusion section of this letter.

Legislation and/or Administrative Policy

The Ontario Retail Sales Tax Act (the Act) taxes the purchaser of tangible personal property (TPP) and taxable services.

Section 1 of the Act defines these items to mean:

TPP means personal property that can be seen, weighed, measured, felt or touched or that is in any way perceptible to the senses, and includes computer programs, natural gas and manufactured gas.

"Taxable service" is defined in part as: ...

There are two types of property for RST purposes, TPP and real property. 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.

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 (PEC).

Where a real property contractor supplies and installs items as fixtures to real property, the contractor is considered to be the end-user of the items and is liable for RST on their cost of the items unless the customer would be entitled to an exemption on the purchase of the items, (e.g. production equipment for the use of a manufacturer).

No RST is to be charged to the customer on real property contracts. The installation labour is not taxable.

Analysis and Conclusion

We will now address each of your questions.

1. You sell signs and sign products and charge and remit RST. You may or may not install the signs that you sell. The signs that are installed are secured to the ground with pegs and cement blocks. You are requesting confirmation of the proper RST application on these sales.

Signs that are permanently attached to real property are considered fixtures attached to real property after installation. Where a real property contractor supplies and installs items as fixtures to real property, the contractor is considered to be the end user or purchaser of the items and is liable for RST on the cost of the items that become real property or fixtures when installed. No RST should be charged or shown on the contractor's invoice to the customer. RST is not payable by your customers on the charge for the signs and the cost of installation. You would be required to pay RST on the cost of the signboards purchased. The installation labour is not taxable. Where you sell a sign without installation, RST is payable by your customer on the total selling price of the sign, including charges for delivery and installation, unless the customer is entitled to an exemption and provides a properly completed PEC.

2. You deliver signs to customers. The signs are erected and secured to the ground with pins and cement blocks. You are in charge of changing the lettering on the sign boards. The customers have no access to the sign boards.

If you are renting TPP (ie., a mobile sign), then you must charge, collect and remit RST on the rental of the sign unless the person is entitled to an exemption and provides you with a properly completed PEC. However, if what you are selling is advertising space where the person contracting for the advertising service does not have possession of the mobile sign itself, does not insure the sign, does not have access to change the advertisement and is not allowed to move the sign from the designated location, then this is the provision of a non-taxable service and RST should not be charged to your customer. As the provider of a non-taxable service, you must pay RST on all goods and taxable services which you acquire in order to provide the non-taxable service. Such items upon which you must pay RST are sign boards, letters, graphics, trailers, repair parts, etc. since these are purchased for use in the provision of the non-taxable service.

3. You have signs placed in third party locations and provide the letter changing services as in point 2 above. The customer may never see the sign.

Same as A2 above.

We are enclosing Retail Sales Tax Guide 204 - Purchase Exemption Certificates, 206 - Real Property and Fixtures, 401 - Manufacturing Contractors and 601 - Labour Charges for your information.