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 Please be aware that any statute or policy referred to in this letter may have been superseded.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 MF-0003, May 2000
Thank you for facsimile message of April 5, 2000 inquiring about the application of Ontario retail sales tax
(RST) to leases and repairs of trucks used by your company, Company A for the distribution of your
product.
Understanding of Facts
It is our understanding from your facsimile message that you would like to know if RST applies to the leases
and repairs of trucks used for the distribution of produce (processed in your plant) to the food service
industry and retail businesses. Also, further to our conversation of May 5, 2000, you believe these delivery
trucks to be part of the production process and therefore, feel that Company A should not have to pay RST
on the leases and repairs to these trucks.
Legislation and/or Administrative Policy
Section 1 of Regulation 1013 to the Ontario Retail Sales Tax Act (Act) provides the definition of a
"manufacturer" or "producer" and states in part:
"manufacturer" or "producer" means a person who manufactures, fabricates, produces or
assembles, as applicable, tangible personal property for sale, where the fair value of such
tangible personal property sold to others exceeds $5,000, or where the fair value of such
tangible personal property for that person's own use exceeds $50,000, in the fiscal year...
Paragraph 7(1)40 of the Act provides an exemption from RST on production machinery and states that
such machinery, equipment or processing materials prescribed by the Minister that are purchased to be
used by a manufacturer or producer directly in the manufacture or production of tangible personal
property...but not...machinery, equipment or processing materials...that are used in a manner,
process, industry or enterprise prescribed by the Minister".
Production machinery and equipment excluded from the exemption available to manufacturers or producers
in paragraph 40 of subsection 7(1) of the Act are described in subsection 14(1.1) in Regulation 1012 of the
Act which states in part:
The following machinery and equipment are excluded from the exemption conferred by paragraph
7(1)40 of the Act:
- Any vehicle, and parts for it, that requires or has a permit issued under
subsection 7(7) of the Highway Traffic Act".
Analysis and Conclusion
Vehicles, and any parts for those vehicles, that require or have a permit issued under subsection 7(7) of
the Highway Traffic Act, are excluded production machinery/equipment and therefore, do not qualify as
exempt production machinery and equipment.
As a consequence, Company A is responsible for paying RST on the leases and repairs of its delivery
trucks.
Enclosed for your information is Retail Sales Tax Guide 400 - Manufacturers.
If you have any further questions, please contact our office.
