RST Information Notice, August 2003
About this
Notice
The 2002 Ontario Budget included a provision to exempt from Retail Sales Tax (RST)
reinforced concrete used to make structures that are integral component parts of exempt
production machinery or equipment, under certain conditions. This Notice provides details of
the conditions under which the reinforced concrete may be purchased exempt from RST.
Background
Prior to the 2002 Ontario Budget, reinforced concrete poured into forms off-site to build a
structure that was used directly and exclusively as an integral component of exempt
production machinery or equipment was exempt from RST. However, concrete poured onsite
to create the same structure was taxable.
Effective June 18, 2002, reinforced concrete poured on-site to make structures that are
integral component parts of exempt production machinery or equipment is exempt from
RST. For purposes of the exemption, "reinforced concrete" means ready-mix concrete and
includes any embedded or attached reinforcing material.
When is
Reinforced
Concrete
Exempt?
To qualify for the exemption from RST, the reinforced concrete must be used in the
construction of a structure for the use of a manufacturer for at least one of the following
purposes:
- directly and exclusively (i.e., 90% or more) as an integral component of exempt
production machinery or equipment
- directly and exclusively to detect, prevent, measure, treat, reduce or remove
pollutants to water, soil or air, but only if the pollutants are attributable to the
manufacture or production of tangible personal property (TPP)
- as a foundation or base that forms an integral part of exempt production machinery
or equipment, but only if the structure is required by engineering specifications for
the purpose of vibration protection or elevation in order to permit gravity feeds during
the manufacturing or production process
- as an elevated access to exempt production machinery or equipment for operational
and maintenance purposes.
Examples of such structures, include, but are not limited to:
- supports and connections for process piping and flare stacks
- cooling towers
- concrete lining in mining shafts
- concrete used as a fire retardant on structural steel that qualifies as exempt
production machinery or equipment
- environmental treatment apparatus and equipment
- above ground bases and foundations that are built to seismic and gravitational
specifications and form an integral part of exempt production machinery or
equipment
- catwalks, platforms, walkways and similar structures, if they provide an elevated
access to exempt production machinery or equipment for operational and
maintenance purposes.
When is
Reinforced
Concrete
Taxable?
Reinforced concrete is not exempt from RST when it is used in the construction of:
- a building
- floors and walls of a building
- bases and foundations that merely provide a platform for machinery and
equipment
- environmental containment slabs
- facilities for the handling, storage or transfer of materials (excluding facilities used for
the control of pollutants attributable to the manufacture of TPP).
Reinforced
Concrete
Purchased by
Manufacturers
Manufacturers who purchase reinforced concrete (without installation), for use in the
construction of exempt production machinery or equipment, must provide the seller with a
properly completed Purchase Exemption Certificate (PEC) to claim the exemption from RST
(see RST Guide 204 - Purchase Exemption Certificates).
Where a manufacturer purchases reinforced concrete for a taxable use, the manufacturer
cannot issue a PEC and must pay RST on the purchase price of the reinforced concrete,
including any charges for delivery or installation.
Reinforced
Concrete Used
in
Construction
Contracts
Where a concrete manufacturer, concrete supplier or real property contractor supplies and
installs reinforced concrete for a manufacturer, and the concrete structure will be real
property or a fixture attached to real property upon installation, it is the responsibility of the
installer (i.e., concrete manufacturer, concrete supplier or real property contractor) to
determine if the structure qualifies as exempt production machinery or equipment.
If the structure qualifies as exempt production machinery or equipment, the installer (i.e.,
concrete supplier or real property contractor) is not required to pay/remit RST on its cost of
the reinforced concrete. Installers who purchase reinforced concrete for use in such
contracts may claim an exemption from RST by issuing a properly completed PEC to the
supplier/manufacturer of the reinforced concrete.
If the structure does not qualify as exempt production machinery or equipment, the installer
must pay/remit RST on its cost of the reinforced concrete. An installer who manufactures or
produces reinforced concrete is required to remit RST on the manufactured cost of the
reinforced concrete (see RST Guide 401 - Manufacturing Contractors). An installer who
does not manufacture or produce the reinforced concrete must pay RST directly to the
supplier/manufacturer of the concrete on the purchase price, including any delivery charges.
The RST paid on the items purchased or manufactured for these contracts forms part of the
cost used by the installer to determine the final contract price. Installers should not quote or
bill RST separately to their customers. Installation labour for real property contracts is not
subject to RST.
If the concrete structure will remain TPP upon installation, the installer must charge RST on
the reinforced concrete and installation, plus any delivery charges, unless the manufacturer
provides a properly completed PEC.
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/finance.
