RST Information Notice, August 2005

• This notice outlines changes to the rules governing Purchase Exemption Certificates (PECs).

Background

PECs are used by persons entitled to claim an exemption from Retail Sales Tax (RST) on the purchase of taxable goods and taxable services or entering into a contract of insurance or a benefits plan. These certificates are to be given to suppliers by the purchaser at the time of sale.

The simplification of PECs under the Retail Sales Tax Act (Act) was announced in the 2004 Ontario Budget. The amending legislation, Bill 149, Budget Measures Act (Fall) 2004, received Royal Assent on December 16, 2004. Technical amendments have now been made to Regulations 1012 and 1013 under the Act to implement these changes.

What Changed?

The amendments set out new definitions for valid identity card and valid purchase exemption certificate.

Legislative amendments related to PECs:

• remove the signature requirement, expiry date, and the list of items to be purchased RST exempt, thus permitting the electronic use of PECs and simplifying the format
• authorize carriers and broker drivers of multijurisdictional vehicles (MJVs) to use PECs to purchase or lease MJVs and trailers, plus any related repair parts, labour, warranty or maintenance service exempt from RST
• authorize the use of PECs when purchasing taxable services (computer-related) exempt for resale
• permit the use of valid identity cards instead of PECs for farmers, foreign representatives and officials, Status Indians, and blind persons on certain purchases.

Who is Affected?

The new PEC provisions affect all vendors, and permit the following purchasers to use identity cards instead of PECs: farmers, foreign representatives and officials, Status Indians, and blind persons.

Impact

The amendments will simplify the use of PECs, and in turn reduce red tape and compliance costs for vendors.

For More Information

For more information, please contact the nearest Ontario Ministry of Revenue Tax Office listed under Taxes - Provincial (Retail) Sales Tax in the blue pages of your telephone directory, or visit our website at www.ontario.ca/revenue.

© Queen's Printer for Ontario, 2005

ISBN 0-7794-8707-9