Monument Dealers

RST Guide 403, May 2006

The information in this Guide explains how Retail Sales Tax (RST) applies to monument dealers. Please note that this Guide replaces the previous version dated March 2001.

Manufacturer

Under Ontario's Retail Sales Tax Act, a manufacturer is a person who manufactures, fabricates, produces or assembles goods for sale, where the fair value of the goods sold to others is more than $5,000 in the fiscal year or, the fair value of goods manufactured for own use is more than $50,000 in the fiscal year.

Manufacturing Contractor

A manufacturing contractor is a person who manufactures or produces taxable goods for own use in real property contracts, where the manufactured cost of the goods is more than $50,000 per fiscal year. Real property includes items supplied and installed, which after installation are permanently attached to real property, e.g., land or a building.

Sales

Retail Sale

A monument dealer (dealer) may sell a cemetery monument, marker or plaque (monument) to a customer, and the employees of the cemetery install the monument. If the customer pays the installation fee directly to the cemetery, the cemetery is not considered to be a subcontractor of the dealer, and the dealer is not considered to be a manufacturing contractor. The sale of the monument is a sale of tangible personal property and the dealer must charge RST to the customer on the selling price, including any delivery charges.

Supply Only - Lettered Monuments

RST must be charged on the selling price of the monument, including any delivery charges, unless the customer provides a valid Purchase Exemption Certificate (PEC) to their supplier. RST must also be collected on any charge for lettering the monument. The dealer must apply for a Vendor Permit from any Ontario Ministry of Revenue Tax Office, since RST is to be charged to customers.

A dealer who makes and/or letters monuments for sale to others without installation is considered to be a manufacturer if the sales of manufactured monuments are more than $5,000 in a fiscal year. If the sales are less than $5,000 in a fiscal year, the dealer is not considered to be a manufacturer for that fiscal year.

Raw materials may be purchased exempt from RST. Further, most production machinery, equipment and processing materials used in the manufacturing and lettering of monuments can be purchased exempt from RST by dealers if they qualify as manufacturers, and they provide a valid PEC to their suppliers. (see RST Guide 400 - Manufacturers and RST Guide 204 Purchase Exemption Certificates).

Supply and Install - Lettered Monuments

a) Installation of Monuments Manufactured by Dealer

A dealer who makes and/or letters monuments is considered to be a manufacturing contractor if the:

monuments are installed by or on behalf of the dealer, and
fair value of the manufactured monuments is more than $50,000 in a fiscal year.

Manufacturing contractors must apply for a Vendor Permit from any Ontario Ministry of Revenue Tax Office. Raw materials may be purchased exempt from Retail Sales Tax (RST). Further, most production machinery, equipment and processing materials used in the manufacturing and lettering of monuments, can be purchased exempt from RST, provided a valid PEC is given to the supplier. However, RST must be paid directly to suppliers on equipment used to install the monuments.

Manufacturing contractors are required to pay RST on the manufactured cost of monuments that are supplied and installed.

The manufactured cost may be determined by using:

actual cost records, or
the following formula: 55 per cent × the installed selling price

The method chosen must be used consistently for the fiscal year. RST must be paid when the monument is installed. The tax is to be shown on line 3 and remitted by the due date of the next RST return to be filed.

A manufacturing contractor must not charge or show RST on the selling price. The contract is to be tendered on a tax-included basis. The RST paid to suppliers forms part of the contractor's cost used to determine the final contract price.

b) Installation of Monuments Purchased From Ontario Suppliers

A dealer who installs lettered monuments purchased from Ontario suppliers and who is not physically involved either in the manufacture of the monuments, or in lettering, is considered to be a real property contractor (see RST Guide 206 - Real Property and Fixtures). If the monuments are installed on behalf of the dealer, the dealer is still considered to be a real property contractor.

A real property contractor must:

pay RST directly to the supplier on the purchase of the monument, including the charges for lettering
pay RST directly to the supplier on the purchase of materials, machinery and equipment used to install the monument
not charge RST on the selling price. The contract is to be tendered on a tax-included basis. The RST paid to suppliers forms part of the contractor's cost used to determine the final contract price.

c) Installation of Monuments Purchased From Out-of-Province Suppliers

A dealer who installs lettered monuments purchased from out-of-province suppliers and who is not physically involved in either the manufacture of the monuments, or in lettering, is considered to be a real property contractor. If the monuments are installed on behalf of the dealer, the dealer is still considered to be a real property contractor.

In this instance, the real property contractor must:

apply for a Vendor Permit from any Ontario Ministry of Revenue Tax Office
account for tax on line 3 of the Retail Sales Tax (RST) return if the supplier has not Monuments charged tax on the purchase of materials, machinery and equipment used to install the monuments
account for tax on line 3 of the RST return if the supplier has not charged tax on the purchase of monuments, including charges for lettering
not charge RST on the selling price. The contract is to be tendered on a tax-included basis. The RST paid to suppliers forms part of the contractor's cost used to determine the final contract price.

RST, if applicable, must be shown on line 3 of the RST return and paid by the due date of the next return following the date of purchase. The tax payable on the purchase price must be in Canadian funds, including any federal duty and excise tax that apply, and any charges for delivery or transportation. RST is not payable on the federal Goods and Services Tax (GST).

d) Monuments Lettered After Installation

When the monument is lettered after installation, RST does not apply to the charge for lettering. The dealer lettering the monument is considered to be a real property contractor, and must pay tax on all equipment and materials used.

If the monument is installed by the cemetery and the customer pays the installation fee directly to the dealer, the cemetery is acting as the dealer's subcontractor. The dealer is considered to be either a real property contractor or a manufacturing contractor, depending on who manufactured the monument.

Non-Taxable Service

Funeral homes and cemeteries that supply and install burial vaults, urns, caskets, etc. and supply flowers are considered to be providing a non-taxable service. RST is to be paid on all materials and equipment used to provide this non-taxable service. No RST is to be charged to the customer.

If the funeral homes and cemeteries hire a sub-contractor to supply and install the above items, the sub-contractor is required to pay RST on all materials and equipment as outlined under the Supply and Install - Lettered Monuments section of this Guide.

Legislative References

Retail Sales Tax Act, Section 1
Regulation 1012 under the Act, Section 1
Regulation 1013 under the Act, Section 1 and Subsection 3(2)

For More Information

The information contained in this publication is only a guideline. For more information, please contact the Ontario Ministry of Revenue at 1 866 ONT-TAXS (1 866 668-8297) or visit our website at ontario.ca/revenue.

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