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 Please be aware that any statute or policy referred to in this letter may have been superseded.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-0008, October 2000
Thank you for your letter of October 10, 2000 concerning the application of Ontario retail sales tax (RST)
with respect to the purchase of equipment, parts, and consumables utilized in logging operations.
Understanding of Facts
It is our understanding that you are a logging contractor involved directly in the production of tree length
logs and the building and maintenance of logging roads. You have indicated that you are comfortable with
your knowledge of the application of RST pertaining to items clearly defined as being used for logging
purposes. However, you are seeking clarification as to the RST status of equipment, parts, and
consumables utilized in a combination of logging operations and other operations.
Legislation and/or Administrative Policy
Paragraph 7(1)40 of the Ontario Retail Sales Tax Act provides an exemption for machinery, equipment or
processing materials purchased for the use of a manufacturer or producer. Logging is considered to be a
manufacturing operations if the fair value of the cut lumber sold to others exceeds $5,000 in the fiscal year.
Logging operations are defined in section 1 of Regulation 1013 as:
- felling and sawing of trees into desired lengths of logs,
- skidding or otherwise moving the logs to central assembly points including skidways, landing or
log dumps,
- loading of the logs onto transportation equipment, and
- moving the logs to the log dump at the sawmill,
and includes the construction and maintenance of log haul roads and dump areas, clearing and preparation
of land for tree harvesting and reforestation, and planting of tree seeds and seedlings within timber cutting
limits, but does not include salvaging of logs, processing of logs into lumber products or the marketing of
lumber products.
For purposes of the exemption, the prescribed machinery and equipment includes internal combustion
tractors, other than highway truck tractors, for use exclusively in logging operations, as defined in section 1
of Regulation 1013. The exemption also includes, machinery, logging cars, blocks and tackle, wire rope
used exclusively in logging operations, logging wagons and logging sleds and parts for the above.
The exemption does not include licensed vehicles. However, a logging company may purchase logging
trucks exempt from RST. The trucks must not require or have a permit issued under subsection 7(7) of the
Highway Traffic Act and must be used exclusively in the logging operations as defined in section 1 of
Regulation 1013, to qualify for the exemption. The trucks should be used for the purposes of hauling logs
from the stump to the skidway, log dump or common or other carrier.
Repairs and maintenance of exempt equipment also qualify for the exemption.
Grease, lubricating oils or fuel for use in internal combustion engines are excluded from the exemption.
Oils and fluids are only exempt when used by a logger as hydraulic oil in exempt equipment.
A logger is entitled to purchase safety clothing and equipment exempt from tax provided it is given free of
charge to employees involved directly in the logging operation. The following items qualify for this
exemption:
- safety boots
- safety hats
- safety gloves
- safety headgear
The exemption for safety clothing does not apply to clothing for those employees who carry out
maintenance or administrative duties.
Fire extinguishers qualify for exemption when purchased for use in a logging operation.
The following items qualify for exemption as logging equipment or as repair and maintenance equipment for
use by a logger in servicing exempt equipment:
- skidder equipment
- chainsaws, chains and bars, parts and accessories
- grease guns
- picaroons and axes
- flagging tape
- tree marking paint
- tools used to repair exempt equipment and machinery
Machinery, equipment, and tools are deemed to be used exclusively in a logging operation if they are used
at least 90 percent of the time in logging operations.
Repair machinery, equipment, and tools are deemed to be used directly in the repair and maintenance of
manufacturing machinery and equipment if more than 50 percent of their use pertains to manufacturing
machinery and equipment.
Analysis & Conclusion
In order that a determination be made on the eligibility of the repair parts and consumables that have been
listed in your correspondence, the percentage of use of the machinery and equipment involved must first be
determined. Parts, such as air filters, nuts and bolts, batteries, bulbs, welding rods, steel, bearings, and
belts may be eligible as either manufacturing machinery or equipment, or as equipment which repairs and
maintains manufacturing equipment.
If the listed parts pertain to equipment used in the logging process, a minimum of 90 percent of the
equipment's use must be involved in direct logging activity in order that an entitlement to a refund of RST
be held. If the parts pertain to equipment used in the repair and maintenance of logging equipment, a
refund entitlement is held if the equipment is used more than 50 percent of the time in such repairs.
Oils, fuels, lubricating grease, antifreeze, and other fluids used in internal combustion engines do not
qualify as manufacturing equipment or repair equipment unless they are used specifically as hydraulic
fluids in such equipment.
A clear statement can not be made at this time to address your concern pertaining to miscellaneous garage
supplies as they have not been specifically identified either by name, or by use. Essentially, if such
supplies are incorporated into the logging equipment or into repair and maintenance equipment, and the
above criteria are satisfied, a refund entitlement would be held. Similarly, if the miscellaneous supplies
were used in repair and maintenance of manufacturing equipment, in excess of 50 percent of their total
use, they would qualify as repair equipment.
Please be advised this ruling has been released based on the representations provided in your letter. Key
consideration has been given to the fact that items referenced have been incorporated into, or serviced
only, unlicensed equipment.
If you feel you qualify for a refund of RST please submit a completed "Application for Refund of Retail
Sales Tax" and all supporting documentation to:
Retail Sales Tax Branch
Refund Unit
1600 Champlain Avenue, 2nd Floor
Whitby, ON L1N 9B2
Applications for refund of RST must be made within 4 years of payment of taxes. An application form has
been enclosed for your convenience.
If you have any further questions, please contact our office.
