RST Information Notice, November 2005

• On November 2, 2005, the Ontario Government introduced Bill 18, Budget Measures Act, 2005 (No. 2). This bill includes proposed amendments to the Retail Sales Tax Act (Act) to implement measures announced in the May 2005 Ontario Budget, as well as other technical amendments. The legislation must be passed by the Legislature and receive Royal Assent to become law.

Insurance

The government proposes to remove cross-references to the Insurance Act in the definitions of insurance and insurer and incorporate these definitions directly into the RST Act.

Waivers

The Act was amended effective December 16, 2004 to authorize the Minister of Finance to assess or reassess a person after the expiry of the time limit for issuing an assessment if, before the expiry of the time limit, the person has filed a waiver in a form approved by the Minister.

The proposed amendments will permit the Minister to assess or reassess a person after the time limit, if before December 16, 2004, the person provided the minister with a written waiver of the time limit. It is proposed that these provisions be effective December 16, 2004.

Booster Seats

As announced in the May 2005 Ontario Budget, it is proposed that the Retail Sales Tax (RST) exemption for child car seats used in motor vehicles be expanded to include qualifying booster seats purchased on or after September 1, 2005. Refer to RST Info Notice - Booster Seats Used in Motor Vehicles for more details.

Simplified RST Calculation for Computer Related Services

As announced in the May 2005 Ontario Budget, the government proposed a pilot project for small software businesses to simplify the RST determination and collection on software service contracts containing both taxable and non-taxable components sold for one price.

RST currently applies at the rate of 8 per cent to taxable software services. Where a sale includes both taxable and non-taxable software services, vendors must determine the RST liability of each software service being provided.

The proposed amendments to the Act would allow for the collection of RST at a lower tax rate (i.e., 6 per cent) on the total price of eligible software service contracts entered into during the pilot period, instead of breaking out the taxable software services for the regular RST calculation.

To be eligible to participate in the pilot and to use the optional method of RST calculation, vendors will be invited to apply and must receive approval from the Ministry of Revenue. Eligible participants will require the customer's consent in order to apply RST at the lower rate.

An Info Notice is being drafted to announce the specific details of the pilot project including dates, duration and qualifying criteria.

Returnable Containers

Manufacturers are required to pay RST on the purchase of returnable containers (i.e., containers that are intended to be returned from the customer to a manufacturer for refilling). The ministry allows manufacturers with production facilities in more than one province to reasonably allocate tax to each province in which the containers are refilled.

The proposed legislation would permit the Minister to make regulations determining the basis and method of calculating, paying, collecting or accounting for RST in respect of the consumption or use of returnable containers acquired anywhere in Canada and refilled in Ontario.

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 0-7794-9176-9