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 Please be aware that any statute or policy referred to in this letter may have been superseded.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-0017, March 22, 2002
Thank you for your facsimile dated November 27, 2002 regarding the application of Ontario retail sales tax (RST) to safety coats, boots and gloves supplied to workers.
Understanding of Facts
It is our understanding that Company A is operating a frozen food factory in Ontario. Company A supplies necessary safety coats (freezer coats), boots and gloves to its employees to protect them from the cold. Company A enquires as to whether it may purchase these safety items exempt from RST.
Legislation and/or Administrative Policy
A manufacturer is defined in section 1 of Regulation 1013 under the Ontario Retail Sales Tax Act (Act) as:
"...a person who manufactures, fabricates, produces or assembles 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 for such tangible personal property manufactured for that person's own use exceeds $50,000 in the fiscal year..."
Paragraph 7(1)40 of the Act provides an exemption for machinery, equipment or processing materials used primarily and directly by a manufacturer in the manufacture of tangible personal property or directly in and exclusively for research or development purposes. The equipment must be prescribed in Regulation 1012 s.14(1) and must not be excluded under Regulation 1012 s.14(1.1).
Safety gloves and other protective clothing, glasses or footwear, purchased by a manufacturer and provided free of charge to employees in order to prevent injury or contamination to these employees are exempt under section 7(1)40 of the Act. This exemption is provided on the basis that these articles are safety devices or equipment described under paragraph 4 of subsection 14(1) of Regulation 1012 under the Act. It is not necessary that the work gloves, safety glasses, other clothing or footwear have special protective features built into them in order to qualify for the exemption.
It should be noted that this exemption for safety clothing, footwear and equipment only applies when the employees are directly involved in the manufacturing or production of goods, (i.e., production employees). The exemption does not apply to clothing for those employees who carry out maintenance or administrative duties, nor to clothing that is provided to protect the worker or their clothes from getting dirty.
As an administrative policy, when a manufacturer requires each employee to pay a standard nominal charge (such as $5.00) on the purchase of safety equipment (i.e., clothing, boots, etc.), the safety equipment is still exempt under the Act. If the employee purchases the safety clothing, equipment, and/or boots, then there is no exemption from RST even if the manufacturer reimburses the employee.
Analysis & Conclusion
Company A may purchase freezer coats, boots and gloves as safety equipment for its employees exempt from RST provided the conditions outlined above are met. In order to claim an exemption from RST on the purchase of the equipment, Company A must provide a properly completed purchase exemption certificate to its suppliers.
We are enclosing Ontario Sales Tax Guides 204 - "Purchase Exemption Certificates" and 400 - "Manufacturers" for your information.
If you have any further questions, please contact our office.
