Retail Sales Tax Rebate for Building Materials Incorporated Into Electricity Generating, Qualifying Nuclear and Deep Lake-Water Cooling Facilities

RST Information Notice, July 2003

About this Notice

This Notice explains how owners of eligible electricity generating facilities or deep lake-water cooling facilities may receive a rebate of Retail Sales Tax (RST) paid on building materials purchased and incorporated into such facilities after November 25, 2002 and before January 1, 2008. The rebate is also available to owners of qualifying nuclear facilities for building materials purchased and incorporated into such facilities after June 1, 2003 and before January 1, 2008.

Background

As part of the Electricity Pricing, Conservation and Supply Act, 2002, the Ontario government introduced the rebate for RST paid on the purchase of building materials incorporated into eligible electricity generating facilities, qualifying nuclear facilities or eligible deep lake-water cooling facilities. The rebate applies to new facilities as well as upgrades and expansions of existing facilities.

Alternative or Renewable Source of Energy

For the purpose of this rebate "alternative or renewable source of energy" means a source of energy that produces electricity from wind, water, a biomass resource, hydrogen, biogas, biofuel, landfill gas, an eligible fossil fuel (i.e., natural gas, blast furnace gas, coke oven gas, basic oxygen furnace gas or peat), uranium, solar energy, geothermal energy, tidal forces or thermal waste.

Eligible Electricity Generating Facilities

An "eligible electricity generating facility" means a facility in Ontario, excluding residential premises and multi-residential premises, and including qualifying property incorporated into the facility,

• that is substantially used to generate electricity from alternative or renewable sources of energy
• that generates the electricity for its own consumption or for delivery to a person in Ontario or to the Independent Electricity Market Operator (IMO)-controlled grid, and
• that is not a non-qualifying nuclear facility.

The "qualifying nuclear facilities" are:

• Bruce Nuclear Generating Station A (Units 1 and 2)
• Pickering Nuclear Generating Station A (Units 1, 2 and 3).

"Qualifying property" means:

• tangible personal property used to deliver electricity to a person in Ontario or to the IMO-controlled grid
• tangible personal property used to convey water to a hydro-electric turbine or to a reservoir that supplies water to a hydro-electric turbine
• tangible personal property used in the distribution of steam or heated water for the purposes of district heating.

District heating means the heating of more than one building through the distribution by underground pipes of steam or heated water from a central location.

Facilities selling more than 10% of the electricity generated to customers outside Ontario will not qualify as an eligible electricity generating facility. If an electricity generating facility ceases to qualify within four years of receiving the rebate (through significant exports, i.e., more than 10% of the electricity generated), the rebate must be repaid.

Eligible Deep Lake-Water Cooling Facilities

An "eligible deep lake-water cooling facility" means:

• a facility in Ontario, including qualifying property, that uses the constantly cold water found at the bottom of a lake to cool the fluid circulated through a district cooling system.

District cooling means the cooling of more than one building through the distribution by underground pipes of cooling fluid from a central location.

• tangible personal property used to collect water for a deep lake-water cooling facility or to distribute fluid through a district cooling system, and includes production machinery and equipment that is not otherwise eligible for exemption under the Retail Sales Tax Act.

Building Materials Eligible for the Rebate

For an electricity generating facility, including a qualifying nuclear facility, building materials that are eligible for the rebate include:

• materials used for structures housing production equipment (producing electricity and/or steam), and related processes such as control rooms, instrumentation, environmental or emission monitoring rooms
• materials used for ancillary buildings related to the facility, such as security offices that ensure the safe operation of the facility.

The rebate does not apply to production machinery, equipment and other items such as turbines and generators that may be exempt from RST under any other section of the Retail Sales Tax Act.

For a deep lake-water cooling facility, a rebate may be claimed on building materials, such as:

• pipes, pumps, and valves to collect water, to carry water through the production facility, and to distribute cooling fluid to customers
• materials used for structures housing production equipment, and related processes such as control rooms and instrumentation
• production machinery, such as chillers and heat exchangers.

Who can Claim the Rebate?

The rebate may be claimed by the owners/lessees of eligible electricity generating facilities, including qualifying nuclear facilities, and of deep lake-water cooling facilities who purchase and incorporate building materials into these facilities.

The owner/lessee of an "eligible facility" may claim a rebate of RST paid on the purchase of building materials that were purchased either by the owner/lessee or by a contractor under a written construction contract and incorporated into an eligible facility.

Calculating the Rebate

Where the owner/lessee purchases the building materials directly from a supplier, without installation, the amount of the rebate is based on the actual amount of RST paid on the building materials.

Where the owner/lessee enters into a written contract with a contractor to construct, expand or renovate an eligible electricity generating or deep lake-water cooling facility, and does not know the actual amount of RST paid by the contractor, the rebate is based on a percentage of the total contract price as follows:

• if the federal Goods and Services Tax (GST) is included in the contract price, the rebate is calculated by multiplying the payments made (including the GST) by 3%
• if the GST is not included in the contract price, the rebate is calculated by multiplying the payments made by 3.4%.

When calculating the rebate, using one of the above formulas, the following costs must be removed from the total contract price before calculating the rebate amount:

• land or land improvement costs
• the cost of obtaining a performance bond
• charges for development or for project consulting services
• architect's fees
• building permit fees
• charges for temporary facilities
• cost of demolition
• equipment rental charges, and
• the cost of tangible personal property that may be exempt from tax under any other section of the Retail Sales Tax Act.

If the contractor provides the owner/lessee with actual receipts or a signed statement to confirm the actual amount of RST paid on the building materials, the owner/lessee may choose to claim this amount.

Rebate Time Frames

Eligible building materials must be purchased and incorporated into eligible electricity generating and/or deep lake-water cooling facilities after November 25, 2002 and before January 1, 2008. For qualifying nuclear facilities, the building materials must be purchased and incorporated into eligible facilities after June 1, 2003 and before January 1, 2008.

How to Claim the Rebate

To claim a rebate, a completed "General Application for Refund of Retail Sales Tax" form, along with supporting documentation, must be submitted to the Retail Sales Tax Branch - Refund Unit, 1600 Champlain Drive, Whitby, Ontario, L1N 9B2.

If the actual amount of RST paid is being claimed, a copy of the sales contract, invoice or other receipt to show the date of purchase, the amount of RST charged, proof that the RST was paid and confirmation of the installation date must be included with the rebate claim.

If the claim is being made for building materials purchased and incorporated by a contractor as part of a construction contract, a copy of the contract and proof of payment must be included. As an alternative, if the actual amount of RST paid by the contractor is being claimed, copies of the contractor's invoices or a signed statement by the contractor stating the amount of the RST paid on the eligible building materials must be included.

Rebate claims must be received by the Ministry of Revenue within four years from the date the RST was paid or from the date the contract was paid. Please allow 6 to 8 weeks for processing of the rebate.

Please note that interest is not payable on these rebate claims.

Interpretation of Scientific Matters

The Ministry of Energy and Infrastructure will be responsible for providing opinions relating to engineering and scientific matters for this rebate program.

For More Information

For more information or to obtain a refund form, please contact the nearest Ontario Ministry of Revenue Tax Office listed under Taxes - Provincial (Retail) Sales Tax in the blue pages of your telephone directory, or visit our website at ontario.ca/revenue.

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