Vehicles Powered by Alternative Fuels

RST Guide 702, August 2006

The information in this Guide explains the Retail Sales Tax (RST) rebate available for vehicles powered by alternative fuels, including hybrid electric vehicles (HEVs). Please note that this Guide replaces the previous version dated February 2006.

Rebate Program

Eligible Vehicles

People who purchase or lease new or used vehicles licensed under the Highway Traffic Act (e.g., automobiles, trucks, and vans) may qualify for a rebate of RST if the vehicles operate on alternative fuels.

Eligible non-hybrid vehicles operate or are converted to operate:

exclusively on electrical energy
exclusively on propane, natural gas, methanol, or other manufactured gases, or
as dual-powered vehicles (vehicles that use one of the alternative fuels mentioned above and that can also be powered by gasoline or diesel fuel).

At the time of the first retail sale, eligible HEVs must have:

power from an electric motor and an internal combustion engine
regenerative braking designed to recover the energy released while slowing down or stopping, and
an energy storage system such as a battery, ultra capacitor or flywheel.

Vehicles not Eligible

With the exception of HEVs, which combine the internal combustion engine of a conventional vehicle with the battery and motor of an electric vehicle, a rebate is not available on vehicles using a mixture of an alternative fuel and gasoline or diesel fuel.

The RST rebate program does not include hybrid electric buses, vehicles converted to hybrid electric power after purchase, or hybrid conversion kits.

RST paid on the purchase of an extended service contract or warranty is not eligible for rebate.

Tax for Fuel Conservation

In addition to the 8 per cent RST, the tax for fuel conservation (TFFC) paid on new passenger cars or new sport utility vehicles, bought or leased, may be rebated if the vehicles operate or are converted to operate exclusively on an alternative fuel.

Dual-powered vehicles do not qualify for a rebate of the TFFC.

Limitations

Dollar Limits

A rebate of the 8 per cent Retail Sales Tax (RST) paid on vehicles powered by alternative fuels, including RST paid on any qualifying conversion costs, is limited to:

$750 for propane vehicles
$1,000 for vehicles powered by any other alternative fuel
$1,000 for HEVs delivered to purchasers after May 9, 2001 and before March 24, 2006
$2,000 for HEVs delivered to purchasers after March 23, 2006 and before April 1, 2012.

The rebate dollar limits do not apply to eligible buses.

Time Limits

A vehicle, other than a HEV, that is converted after purchase, may also qualify for a rebate of RST (including the TFFC). To qualify for a rebate, the vehicle must be converted within 180 days from the date it was purchased.

The purchaser may still be entitled to a rebate of the 8 per cent RST paid on the cost of the conversion kit and labour to install the kit if the conversion is not completed within the 180 days.

Rebate applications must be received within four years from the date the RST was paid.

Long Term Leases

Eligible leases must meet all of the above requirements and the period of the lease must be for 12 months or more. Subject to the limits noted above, rebate claims for long-term leases may be filed:

after the maximum amount of RST available for rebate has been paid
at the end of the lease contract, or
at the end of each 12-month period.

Only one rebate claim per leased vehicle may be made in a 12-month period.

Completing your Application

Mail your signed application, with the required documents to:

Ministry of Revenue
Retail Sales Tax
PO Box 646
Oshawa ON L1H 8X2

Legislative References

Retail Sales Tax Act, clauses 48(3)(g),(h) and (i)
Regulation 1012 under the Act, sections 19 and 20

For Further 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.

Instructions for Applying for a Rebate

To claim a rebate, complete the attached application and return it with the relevant documents outlined below.

1. For Vehicles Manufactured to Operate on an Alternative Fuel

If bought from a dealer, your original purchase contract (bill of sale) showing the purchase price, the date of purchase and the amount of RST paid, or

If bought privately, your original Motor Vehicle Transfer form (MV 1) you received when the RST was paid at a Driver and Vehicle Licence Issuing Office
A copy of your vehicle registration
For previsously owned vehicles, a signed statement from the licensed mechanic who issued the Safety Standards Certificate, on company letterhead, stating the type of power used to operate the vehicle when the inspection was done.

2. For Vehicles, other than Hybrid Electric Vehicles, Converted to Operate on an Alternative Fuel

In addition to the documents required under 1 (a) and (b) above:

Your original conversion invoice showing the date the conversion was completed
Proof that RST was paid (e.g., a copy of the cancelled cheque, a signed receipt, or a copy of the finance agreement)
A description of the fuel system, written by the person who made the conversion.

3. For Leased Vehicles

Your original long-term lease contract setting out the lease payment schedule
Proof that RST has been paid (e.g., cancelled cheques, receipts or a letter from the lessor stating the amount of RST paid for the period covered by your claim).

NOTE: The date for a long-term lease is the date the lease started. Time limits apply.

4. For Conversions Only (completed outside the 180 day time limit)

The documents required under 1(b), 2(a) and (b) above.

If requested, original documents will be returned after the claim has been processed. Please allow six to eight weeks for the ministry to process your application. Missing documents or information will delay the processing of your claim.

For More Information

ISBN 1-4249-1724-7