Retail Sales Tax

Retail sales tax (RST) is charged on:

  • specified vehicles purchased privately from a person who is not a GST/HST registrant, and
  • premiums paid under taxable insurance contracts, group insurance, contributions paid into funded plans, benefits and certain payments made in respect of unfunded plans and qualifying trusts, and payments made into insurance schemes or compensation funds established by statute.

Note: The harmonized sales tax (HST) took effect July 1, 2010 and replaced the RST, with the exception of RST on certain premiums of insurance and benefits plans and RST on private purchases of specified vehicles. The Canada Revenue Agency (CRA) administers the HST. For answers to your HST questions and for more information, visit www.cra.gc.ca or call 1 800 959-8287.

Tax amount

The RST rates are:

  • 13% on specified vehicles purchased privately from a person who is not a GST/HST registrant
  • 8% on insurance and benefits plans

Private vehicle purchases

A specified vehicle includes:

  • motor vehicles or other vehicles that require a permit under the Highway Traffic Act to operate on a highway, such as automobiles, motorcycles and motor scooters, mopeds, buses (e.g., school buses), trucks and vans, motorized recreational vehicles (e.g., motor homes), and trailers
  • off-road vehicles or motorized snow vehicles that require a permit under the Off-Road Vehicles Act or the Motorized Snow Vehicles Act
  • boats
  • aircraft.

When you purchase a vehicle privately from a person who is not a GST/HST registrant, you pay 13% RST when you register as the new legal owner of the vehicle. The amount is based on the purchase price or the vehicle’s wholesale value (Red Book), whichever is greater. Specified vehicles without a Red Book value (e.g., off road vehicles, boats, aircraft, etc.) are taxed at 13% based on the purchase price. RST is collected at ServiceOntario centres across Ontario. You do not pay RST to the seller.

In some cases, you may not have to pay RST if

  • you receive a vehicle from a family member as a gift
  • you are a qualifying foreign representative/official or Status Indian
  • the vehicle is received as part of an estate bequest

Read on: Specified Vehicles [PDF - 107 KB]

Boats and aircraft

Boats and aircraft are registered at federal government offices. No RST is collected at time of registration. You can pay RST (if applicable) at ServiceOntario centres or directly to the Ministry of Finance. Boats and aircraft purchased outside Ontario and brought into Ontario for use may be subject to the 8% Ontario portion of the HST. ServiceOntario centres cannot accept payment of the 8% Ontario portion of the HST for boats and aircraft. For more information please call the Canada Revenue Agency at 1 800 959-8287 or read Goods brought into a participating province.

Specified vehicles (other than boats and aircraft) brought into Ontario

You may be required to pay the 8% Ontario portion of the HST (rather than RST) if you import a vehicle into Ontario from outside Canada or it is brought into Ontario from a non-HST province (e.g., Quebec, Manitoba, Alberta, British Columbia, etc.).

Read on: Specified Vehicles [PDF - 107 KB] or Harmonized Sales Tax and the Provincial Motor Vehicle Tax.

Insurance

You may need to register for a Vendor Permit number, collect and remit the RST, and file a periodic tax return with the Ministry of Finance if you are:

  • a holder of group insurance to whom premiums are paid by persons whose risks are covered by the policy (e.g., a retailer who holds a group policy and then sells an insurance policy to an individual on a purchase)
  • a planholder who self-administers funded or unfunded benefits plans where there is no third party administrator of the plans (e.g., employers who pay premiums and/or collect premiums from their employees for health and welfare benefits plans)
  • a trustee of a qualifying trust
  • an administrator or trustee of funded or unfunded benefits plans
  • a licensed insurer, insurance agent or registered insurance broker
  • the recipient of contributions from insurance arrangements or compensation funds established by or under a federal or provincial Act
  • a seller of taxable insurance contracts (e.g., banks and other financial institutions, motor vehicle dealers).

Read on: Insurance and Benefits Plans [PDF - 162 KB]

Purchase Exemption Certificates

Qualifying purchasers can claim an exemption from RST on certain insurance contracts or benefits plans by providing the supplier with a Purchase Exemption Certificate.

The purchaser is responsible for issuing a valid Purchase Exemption Certificate (i.e., the purchaser can support that all the conditions of the exemption are met) when claiming an exemption from RST.

The supplier is responsible for ensuring the certificate is properly completed (i.e., all the information is filled out on the form) and retaining a copy of the purchase exemption certificate to support the non-collection of RST in case of an audit.

See: Purchase Exemption Certificate [PDF - 108 KB]

Identity card instead of a Purchase Exemption Certificate

Certain purchasers may claim an exemption from RST on specific types of insurance contracts or benefits plans by providing the supplier with a valid identity card at the time of purchase. They include:
  • persons actively engaged in the business of farming in relation to agricultural property who hold a farmer identification card issued by a general farm organization (e.g., Ontario Federation of Agriculture, Christian Farms Federation of Ontario, National Farmers Union).
  • foreign entities, representatives and officials authorized by Foreign Affairs, Trade and Development Canada who hold one of the following identity card types identified on the front
      • D, C and I
      • J - only if titled Admin and Tech Staff or Consular Employees. 
  • Status Indians, Indian Bands or councils of a band pertaining to real or personal property situated on a reserve who hold a Certificate of Indian Status identity card issued by the Aboriginal Affairs and Northern Development Canada (or the former department called Indian and Northern Affairs Canada)
    • Aboriginal Affairs and Northern Development Canada also issues a Temporary Confirmation of Registration Document to newly registered individuals. This document may be used as proof of an individual's registration, pending issuance of the individual's Secure Certificate of Indian Status or Certificate of Indian Status

All other purchasers claiming an exemption must provide a valid Purchase Exemption Certificate to the supplier.

A purchaser cannot use identity cards other than those listed above when claiming an exemption from RST. Suppliers must charge RST on taxable sales when presented with other identity cards.

Read on: Retail Sales Tax Exemption for Foreign Entities, Representatives and Officials

Registration and vendor permits

If you collect premiums for taxable insurance contracts or benefits plans, you need to register as a vendor and get a Vendor Permit. To do this:

  • call the Ministry of Finance at 1 866 ONT-TAXS (1 866 668-8297), or
  • mail or fax the Vendor Permit application to the ministry.

Download: Application for Vendor Permit - Insurance Vendors only [PDF - 431 KB]

Vendor compensation

Compensation is available to vendors who are required to collect RST. It is based on the amount of RST charged (i.e., reported on line 2 of the RST return card).
If the amount of RST you collected is:

  • $20.00 or less, then deduct the whole amount as compensation
  • between $20.01 and $400.00, then deduct $20.00 as compensation
  • $400.00 or more, then deduct 5% of the amount shown on line 2 as compensation.

The annual compensation limit for each legal entity is $1,500 for each 12-month period ending March 31.

Retail sales tax refunds

You can get a refund of RST that has been:

  • incorrectly charged on insurance premiums or benefit plans
  • paid in error when transferring a vehicle at a ServiceOntario centre.

Complete and send a refund application form to the Ministry of Finance within four years from the date the RST was paid. With your completed application, include all supporting documents and proof that RST was paid.

Download: Application for Refund of Retail Sales Tax on Insurance or Benefit Plan Premiums [PDF - 144 MB]

Download: Application for Refund of Retail Sales Tax for the Used Vehicle Information Program [PDF - 102 KB]

Clearance Certificates

If you are selling or closing your business and sell assets (i.e. fixtures, goods, chattels) in bulk, you need to get a Clearance Certificate from the Ministry of Finance.

Before you can get a Clearance Certificate, all taxes you owe under the following laws must be paid:

  • Alcohol and Gaming Regulation and Public Protection Act, 1996
  • Fuel Tax Act
  • Gasoline Tax Act
  • Race Tracks Tax Act
  • Retail Sales Tax Act, and
  • Tobacco Tax Act.

The Clearance Certificate indicates that all taxes, penalties and interest collectable or payable by you, the seller, have been paid or that satisfactory arrangements have been made for such payment or for securing such payment.

A purchaser that fails to obtain a copy of the Clearance Certificate from the seller could be liable for any taxes, penalties and interest owing by the seller at the time of the sale.

The requirements apply to sellers who held or who were required to hold a permit under the Retail Sales Tax Act on or before June 30, 2010, as well as to sellers who, at any time after June 30, 2010, hold or are required to hold a permit under the Retail Sales Tax Act.

All requests for Clearance Certificates must be made in writing, at least two weeks before the sale takes place, and signed by the seller or the seller’s authorized representative. 

The request should be sent by fax to 905 436-4474 or by mail to:

Ministry of Finance
Collection Support Operations
33 King Street West PO Box 627
Oshawa ON  L1H 8H5

Read on: Clearance Certificate Checklist

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