Frequently Asked Questions About Exemptions
- Do I charge RST on goods delivered or shipped to a location outside Ontario?
- What do I need to do if someone claims a diplomatic exemption?
- What do I need to do if someone claims an exemption?
- Can I sell goods exempt from RST to Status Indians? If so, what is required?
- Which goods and services are exempt from RST?
Do I charge RST on goods delivered or shipped to a location outside Ontario?
No. RST does not apply to goods that you ship directly to, or arrange delivery of, a location outside Ontario. You should retain all shipping documents and/or bills of lading to support the exempt sale. If the customer takes delivery of the goods in Ontario, then you must charge RST.
What do I need to do if someone claims a diplomatic exemption?
Eligible holders of diplomatic identity cards may purchase or rent specified goods and services without paying RST. The diplomat must show his/her identity card to receive an exemption from RST. They must also sign a sales document or record. These identity cards may only be used by the individuals to whom they have been issued.
Before making a tax-exempt sale, you should check the back of the customer's identity card to make sure the cardholder is entitled to an exemption in Ontario and check the expiry date on the front of the card to ensure it is still valid.
For further information, please refer to Guide 803 - Foreign States, Representatives and Officials.
What do I need to do if someone claims an exemption?
You must obtain a properly completed Purchase Exemption Certificate from your customer, unless the customer is a Status Indian or a diplomat.
Eligible holders of diplomatic identity cards may purchase or rent specified goods and services without paying RST. The diplomat must show his/her identity card to receive an exemption from RST. They must also sign a sales document or record. These identity cards may only be used by the individuals to whom they have been issued.
Before making a tax-exempt sale, you should check the back of the customer's identity card to make sure the cardholder is entitled to the exemption and check the expiry date on the front of the card to ensure it is still valid.
Diplomatic organizations may purchase goods or services without paying RST, provided they give you a properly completed Purchase Exemption Certificate (PEC).
For further information, refer to RST Guide 204 - Purchase Exemption Certificates
Can I sell goods exempt from RST to Status Indians? If so, what is required?
Most items purchased by Status Indians, Indian bands or band councils for use on reserves are exempt from RST. To receive the exemption, Status Indians must show their federal "Certificate of Indian Status" identification card. If the Status Indian takes the goods with him/her, you must record the purchaser's federal identification card number, name, band name or registry number, and a brief description of the goods sold. Status Indians must pay RST on prices of admission over $4, transient accommodation, taxable labour, alcoholic beverages, and taxable prepared food products purchased off the reserve.
Where you deliver goods (except for motor vehicles) to a reserve, you must keep the delivery slip or bill of lading to prove that the tax exemption was valid. If the goods are delivered to an address off the reserve, RST must be charged.
Where an Indian band or band council claims an exemption, you must obtain a properly completed Purchase Exemption Certificate that is signed by a member of the band or council.
For further information, please refer to Guide 808 - Status Indians, Indian Bands and Band Councils.
Which goods and services are exempt from RST?
Certain goods are unconditionally exempt, due to their nature, and may be purchased exempt from RST by anyone. For example, RST does not apply to food products, children's clothing or drugs and medicines sold under a doctor's prescription. Other exemptions are conditional, that is, the exemption is dependent upon the nature of the purchaser and/or the end-use to which the goods are put; for example, goods purchased for resale, production machinery and equipment purchased for the use of a qualifying manufacturer and hospital equipment purchased by a qualifying hospital.
Examples of services that are not taxable include dry cleaning and personal services such as hair styling or beauty treatments. If you provide a non-taxable service, you do not charge your customer RST. However, you must pay RST on any taxable goods and services you use to perform the non-taxable service.
