RST Information Notice, October 2002

About this Notice

This Notice clarifies how Retail Sales Tax (RST) applies to purchases of taxable tangible personal property (TPP) and taxable services by organizations, such as hospitals, universities and museums, that have tax-exempting provisions in their founding statutes.

Background

In 1997, the Ontario Court of Justice (General Division) interpreted the tax-exempting provisions contained in the founding statutes of certain organizations to include an exemption from RST on these organization's purchases of taxable TPP. The court decision related only to taxable TPP for the organization's own use. Exemptions contained in the organization's founding statute did not exempt the organization from RST on taxable services. Based on the court's ruling, other organizations with tax-exempting provisions in their founding statutes also filed refund claims with the Ministry of Revenue (Ministry) for RST paid on their purchases of taxable TPP.

New Legislation

Effective December 5, 2001, the Retail Sales Tax Act (RST Act) was amended to provide that organizations must pay RST on their purchases of taxable TPP and taxable services, unless their founding statutes contain a tax-exempting clause which expressly refers to the RST Act.

This amendment ensures fairness of the tax system by eliminating RST exemptions that are not available to other organizations in the same sector.

What Remains Exempt?

This change does not affect existing RST exemptions afforded under the RST Act to qualifying organizations. Examples of these exemptions include patient care equipment purchased by hospitals, research equipment purchased by universities, and works of art purchased by public museums.

Refunds

Valid refund claims previously submitted by organizations with tax-exempting provisions in their founding statutes are being processed.

Organizations, whose founding statutes contain a tax-exempting clause, may submit a claim for a refund of RST paid on purchases of taxable TPP made before December 5, 2001. A refund may also be available, under the RST Act, for RST paid before December 5, 2001 on repairs made to the aforementioned TPP. Organizations can contact RST Tax Advisory at 1-888-285-7815 to confirm if they are a qualifying organization.

Refund claims must be received by the Ministry within four years from when the RST was paid. To claim a refund, organizations must submit a General Application for Refund of Retail Sales Tax to the Refund Unit of the Retail Sales Tax Branch, 1600 Champlain Drive, Whitby, Ontario, L1N 9B2, along with all supporting documents, such as sales receipts or invoices.

For More Information

For more information, please contact the nearest Ontario Ministry of Revenue Tax Office listed in the blue pages of your telephone directory, or visit our website at: ontario.ca/revenue.

ISBN 0-7794-3838-8

© Queen' Printer for Ontario, 2002