Cranes Brought into Ontario from the United States for Rental
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 Please be aware that any statute or policy referred to in this letter may have been superseded.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 LR-0002, April 2000
Thank you for your facsimile transmission of March 30, 2000, regarding the application of Ontario retail sales tax (RST) to cranes brought into Ontario from the United States for rental by your company.
Understanding of Facts
We understand that the facts are as follows:
- Company A is a division of Company C based in British Colombia.
- Company A will be acquiring cranes from an American supplier for use in Canada. For the purposes of this ruling we will assume that they will be rented or used in Ontario.
- The cranes are expected to remain in Ontario for approximately six (6) months and will then be returned to the U.S.A.
- Company A provides the cranes either with or without an operator. In some cases, the operator may be provided by the American crane supplier.
- You have requested information on the application of RST to both Company A and your American supplier.
Legislation and/or Administrative Policy
Under the Ontario Retail Sales Tax Act (Act) and the Regulations under the Act, goods purchased or rented by a vendor for resale or rental purposes may be purchased exempt from RST by providing the supplier with a properly completed purchase exemption certificate (PEC). Where the supplier is a nonresident and is not registered with the Retail Sales Tax Branch (Branch), the supplier would not be authorized to charge RST and the customer would not be required to provide a PEC to claim its exemption on cranes being rented for re-rental purposes.
Under subsection 2(18) of the Act, every person who brings tangible personal property (TPP) into Ontario for their own use, or for the use of other persons at their expense, must pay the same amount of tax as would have been payable if the property had been purchased at a retail sale in Ontario. Under subsection 1(1) of the "retail sale" means a sale to a purchaser for the purpose of consumption or use and not for resale".
Analysis
The provisions of paragraph 2(18) of the Act do not apply to a non-resident who rents cranes to a vendor for the purpose of re-rental (resale). However, where the cranes are rented with an operator, this is the provision of a non-taxable service and as the provider of a non-taxable service, the American supplier is required to pay the applicable RST for each month the equipment is used in Ontario.
If Company A rents cranes in Ontario with their own operators, Company A is providing a non-taxable service and is required to self-assess RST for its own use of the cranes. Where the cranes are rented in Ontario by Company A, without an operator, Company A is required charge, collect and remit the applicable RST on the rental charges, including delivery charges, for the crane(s).
Conclusion
Company A is not required to pay RST to its American supplier for the rental of cranes, if the cranes are to be rented by Company A without an operator, to Ontario residents. The American supplier would not be required to register nor to charge RST to Company A if the cranes are rented for re-rental purposes. The American supplier is however, required to register with the Branch where they provide their cranes to Company A with an operator. Registration by the American supplier will allow them to account for RST for their own use of the cranes in Ontario.
In the situation outlined in paragraph two of the above Analysis section, Company A is required to obtain a vendor permit to either self-assess RST for own use, where the cranes are rented with its own operators or to charge, collect and remit the applicable RST on the rental charges where the cranes are rented without an operator.
To obtain a vendor permit, please contact your local Regional Tax Office.
We have enclosed Retail Sales Tax Guide #202 - Goods Brought Into Ontario, for your information.
ISBN 0-7794-2507-3
© Queen's Printer for Ontario, 2005
