RST Information Notice, June 2005
- This notice clarifies how Retail Sales Tax (RST) applies to the sale and installation of swimming pools, hot tubs (both hard-wall and soft-wall) and spas. There has been no change in the supporting legislation and/or policy.
Legislation/ Policy
There are two types of property for RST purposes:
- Tangible Personal Property (TPP) refers to free-standing items.
- Real Property refers to land and any item permanently attached to land.
Fixtures are items of TPP which, upon installation, are permanently attached to real property. Permanently attached means bolted, nailed, screwed, lagged, or in some cases freestanding but by virtue of their size and weight, they cannot be moved without disassembly.
For purposes of this notice, the term 'dealer' refers to a real property contractor, retailer or manufacturer, i.e., the person selling the swimming pool, hot tub or spa to the customer.
Where a dealer supplies and installs items as fixtures to real property, the dealer is
considered to be the end user of the items and is liable for RST on the cost of the items that
become real property or fixtures when installed. The RST paid on items for these contracts
forms part of the cost used by the dealer to determine the contract price. No RST should be
charged or shown on the invoice to the customer. The installation labour is not taxable.
Where a dealer supplies and installs items that remain free-standing TPP, the dealer must charge, collect and remit RST on the total selling price of the item. This would include charges for delivery and installation. In this case, the dealer should purchase the materials exempt from RST by providing the supplier with a properly completed Purchase Exemption Certificate (PEC).
Hard-Wall Hot Tub or Spa, Supply and Delivery Only
When a hard-wall hot tub or spa is delivered and placed in a spot other than where it will be permanently located (sold without installation), it is considered TPP. The dealer must charge, collect and remit RST on both the selling price of the hot tub or spa and any related delivery charge. In this case, the dealer is not liable for RST on the cost of the hot tub.
Hard-Wall Hot Tub or Spa, Supply and Installation
When a hard-wall hot tub or spa is delivered and placed directly on the concrete pad or area where it will be permanently located, it is considered a fixture. The dealer pays RST on the cost of the hot tub or spa and on any installation materials used for the contract. RST must not be charged or shown on the invoice to the customer.
The application of RST remains the same even if the dealer contracts with a third party to do the labour portion or installation of the hard-wall hot tub or the spa. The dealer is required to pay RST on the item and any other materials which become fixtures to real property. RST would not apply to installation labour billed by the third party to the dealer.
Soft-Wall Hot Tubs
A soft-wall hot tub is a soft-sided portable hot tub that can be moved easily and set up in minutes. The tub is typically placed on a deck, patio or a suitable stable surface where it is filled with water and plugged in. It is not placed on a special base or concrete pad where it will be permanently located. Soft-wall hot tubs are not considered fixtures attached to real property.
The dealer must charge, collect and remit RST on both the portable soft-wall hot tub and related delivery and installation charges, whether the hot tub is sold to the customer on a supply only or a supply and install basis. A dealer purchasing a soft-wall hot tub for resale is entitled to claim an exemption if the supplier is provided with a properly completed PEC.
Swimming Pools
In-ground swimming pools and operational parts of the pool are considered to be real property. Examples of operational parts are filters, pumps, motors and heaters.
Above-ground swimming pools and operational parts of the pool are only considered to be TPP when they are sold on a "supply only" basis. The dealer must charge, collect and remit RST on both the selling price and any related delivery charge. In this case, the dealer is not liable for RST on the cost of the swimming pool and operational parts.
Once installed (i.e., installed on support pads), above-ground swimming pools and operational parts become fixtures to real property. The dealer pays RST on the cost of the above-ground swimming pool and operational parts and/or any installation materials used for the contract. RST must not be charged or shown on the invoice to the customer.
Accessories
Accessories remain TPP, therefore the dealer must charge, collect and remit RST on these items. Accessories include, but are not limited to, maintenance kits, vacuum kits, solar blankets and rollers, safety rope and floats, automatic vacuums, winter covers and chlorine.
On contracts for supply and installation that include fixtures and items that remain TPP, invoices to purchasers should separate the charges for fixtures and the labour to install them from the charges for TPP and the labour to install TPP.
Repairs to Items Under Warranty
Where a customer contracts with a dealer for the service, maintenance or warranty of TPP, such as a soft-wall hot tub, RST applies to the contract price. Labour and parts required to do any repairs under a service, maintenance, warranty or extended warranty contract of TPP are exempt from RST as of April 1, 2004.
RST does not apply to contracts for the service, maintenance or warranty of real property/fixtures. The repairer is required to pay RST on the parts that will be incorporated into real property.
Repairs to Items not Under Warranty
When a customer is invoiced for repairs to fixtures, the dealer is liable for RST on the cost of all repair parts and materials used. No RST must be charged or shown on the invoice to the customer. The installation labour is exempt from RST. This applies if the repairer performs the service on site, or if the repairer dismantles a fixture and undertakes the repair service at a separate location. However, where a customer brings a part of a fixture into the store for repairs, the item is no longer considered real property and RST must be charged on the repair parts and labour.
Where TPP is repaired, RST must be charged on the repair parts and labour.
For More Information
For more information, 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.
© Queen's Printer for Ontario, 2005
ISBN 0-7794-8077-5
