Farm Drainage Materials
Information and Disclaimer
This interpretation letter was issued based on the specific circumstances or situation of a taxpayer or vendor and the law and tax policy in effect at the time the ruling was issued. Specific facts relevant to your situation may change the application of the tax. In accordance with the Freedom of Information and Protection of Privacy Act, all confidential and identifying information has been removed from this interpretation letter. Please be aware that any statute or policy referred to in this letter may have been superseded. Where a letter contains links to a retail sales tax publication, the link is to our current publication on that subject, regardless of the date that the ruling was originally issued, and the current publication may not be reflective of the information originally provided. In no event shall the Government of Ontario be liable for any damages whatsoever arising out of, or in connection with, the use of the information contained herein.
Interpretation Letter AG-0002, May 2000
Thank you for your facsimile message of April 19, 2000 inquiring about the application of Ontario retail sales tax (RST) on farm drainage materials.
Understanding of Facts
It is our understanding from your facsimile message that your company, Company A, would like a written ruling regarding farm drainage materials.
Legislation and/or Administrative Policy
Paragraph 19 of subsection 7(1) of the Ontario Retail Sales Tax Act (Act) provides an exemption for irrigation and drainage materials to be used in farming and states:
Materials and equipment required for irrigation purposes, repairs to such equipment, and drainage tiles, when such materials, equipment or tiles are purchased to be used exclusively in the business of farming by a person who, with respect to the purchase, provides a written statement to the vendor stating that the materials, equipment or tiles will be used exclusively in the business of farming. The statement must be signed by:
- the person engaged in the business of farming who will use the materials, equipment or tiles, or
- a responsible official of a municipality that is carrying out a municipal drainage project for which the materials, equipment or tiles are purchased for the use of persons engaged in the business of farming.
ANALYSIS AND CONCLUSION
Materials and equipment required for irrigation purposes, when used exclusively in farming, may be purchased exempt from RST by farmers. This exemption also applies to materials used in the repair of such irrigation systems and drainage tiles. Contractors who perform irrigation contracts exclusively for farmers are considered to be "custom farmers" and are allowed the same exemption when purchasing these materials and equipment.
Exempt materials include pumps, pipe, tiles, valves, fittings and other materials used to create, maintain or repair farm drainage systems. The tile can be of clay, perforated piping, or corrugated galvanized pipe including driveway culverts.
As well as providing a Purchase Exemption Certificate for the purchase of materials used for irrigation and drainage materials, a written statement signed by the farmer certifying that these materials will be used exclusively in the business of farming must also be provided to the supplier in order to purchase these materials exempt of RST. The written statement may also be signed by a responsible official of a municipality when the materials, equipment or tiles are purchased by a municipality in order to carry out a municipal drainage project for the use of persons engaged in the business of farming.
Enclosed for your information is Sales Tax Guide #807 - Farmers.
If you have any further questions, please contact our office.
ISBN 0-7794-2507-3
© Queen's Printer for Ontario, 2002
