Overview

Retail sales tax (RST) is a provincial tax that applies to two main categories:

  • 13% RST applies to specified vehicles purchased privately from a person within Canada who is not a GST/HST registrant
  • 8% RST applies to premiums paid under taxable insurance contracts, group insurance, and certain funded or unfunded benefits plans

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 more information, visit canada.ca/cra or call 1-800-959-8287.

Specified vehicles

You must pay 13% RST when you purchase a specified vehicle privately in Canada from someone who is not a GST/HST registrant.

Specified vehicles include:

  • motor vehicles or other vehicles that require a permit under the Highway Traffic Act to operate on a highway, such as:
    • automobiles, trucks and vans
    • motorcycles and motor scooters (including limited speed motorcycles)
    • mopeds
    • buses
    • motorized recreational vehicles (e.g., motor homes)
    • trailers (e.g., travel trailers, fifth wheel, sport trailer, etc.)
  • off-road vehicles or motorized snow vehicles that require a permit under the Off-Road Vehicles Act or the Motorized Snow Vehicles Act
  • boats (e.g., motor boats, personal watercraft, sail boats, canoes, etc.)
  • aircraft

How RST is calculated

  • For an automobile, van or truck (that has an empty weight of 2,200 kilograms or less) that is purchased privately within Ontario, RST is based on the purchase price or the vehicle's wholesale value (Canadian Red Book), whichever is greater.
  • Other specified vehicles (e.g., trailers, off-road vehicles, boats, aircraft, etc.) are taxed at 13% of the purchase price.
  • Specified vehicles purchased outside Ontario but within Canada are also taxed at 13% of the purchase price.

How to pay

RST is collected at ServiceOntario locations across Ontario. You do not pay RST to the seller.

Exemptions

You may not have to pay RST in certain situations, such as:

  • you receive a vehicle from a qualifying family member as a gift
  • you are a First Nations individual with a Certificate of Indian Status card
  • you receive the vehicle as part of an estate bequest
  • you are relocating your home to Ontario and you are bringing in a vehicle you purchased before you moved

Read on: Specified Vehicles

Vehicles purchased to transport people with physical disabilities

There is no RST rebate program for vehicles used to transport people with physical disabilities. Funding may be available through the Home and Vehicle Modification Program offered by the Ontario March of Dimes.

Specified vehicles purchased from GST/HST registrants in Canada or vehicles brought into Ontario from outside Canada

You do not have to pay RST if you bought a specified vehicle:

  • from a GST/HST registrant in Ontario or elsewhere in Canada
  • outside Canada

Important: You still may need to pay the federal and provincial portions of the HST to the Canada Revenue Agency for these purchases. For information, please contact the Canada Revenue Agency at 1-800-959-8287.

Read on: Specified Vehicles or GST/HST and motor vehicles

Boats and aircraft

Boats and aircraft are registered by the purchaser at Transport Canada offices (federal government). Transport Canada does not collect tax from the purchaser at the time of registration.

You must pay 13% RST when you purchase a boat or aircraft privately (e.g., from someone who is not a GST/HST registrant) in Ontario or within Canada (and it is brought into Ontario for use).

If RST applies, you can pay:

  • at any ServiceOntario location
  • by mailing a cheque or money order to the Ministry of Finance:
    Ministry of Finance
    33 King Street West, PO Box 620
    Oshawa, ON L1H 8E9

Note: Read about the ministry's authority to collect personal information from Transport Canada.

If you receive a Request for Information Boat/Vessel letter from the Ontario Ministry of Finance

If you receive a letter from the ministry about a boat/vessel registered in your name, it likely relates to your RST obligations on a private purchase.

1. Review the letter carefully

The ministry is asking for documents to confirm whether RST was paid or if you qualify for an exemption.

2. Collect the documents you need

You may be asked to provide:

  • a bill of sale showing the purchase price
  • proof of tax paid (if applicable)
  • documents that support you qualify for an exemption, such as:
    • estate bequest
    • gift from a qualifying family member

Learn more about exempt transfers on specified vehicles.

3. Pay the RST if required

If the boat/vessel was purchased privately and no exemption applies, you must pay the RST to the Ministry of Finance.

You can pay:

  • at any Service Ontario location
  • by mailing a cheque or money order, made payable to the Minister of Finance, along with a copy of the letter to:
    Ministry of Finance
    33 King Street West, PO Box 620
    Oshawa, ON L1H 8E9

4. Respond to the letter

You need to respond to the letter, even if you do not owe RST. Use the pre-paid envelope provided or visit any ServiceOntario location.

If you need help, call the Ministry of Finance at 1-866-668-8297.

Boat and aircraft purchased from outside Canada

If you purchase a boat or aircraft from outside Canada, you may need to pay the HST. For more information, please contact the Canada Revenue Agency at 1-800-959-8287.

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 plan holder 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

Purchase Exemption Certificates

You can claim an exemption from RST on certain insurance contracts or benefits plans by providing the supplier with a valid 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 information is filled out on the form) and keeping a copy of the Purchase Exemption Certificate for audit purposes.

Download: Purchase Exemption Certificate

Identity card instead of a Purchase Exemption Certificate

Some purchasers can use a valid identity card at the time of purchase to claim an RST exemption on specific types of insurance contracts or benefits plans.

This applies to:

  • 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 the federal government 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
  • First Nations individuals, 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 federal government
    • the federal government 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.

Important: Other identity cards cannot be used to claim an RST exemption. Suppliers must charge RST on taxable sales if a valid Purchase Exemption Certificate or approved identity card is not provided.

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

Registration and vendor permit

If you collect premiums for taxable insurance contracts or benefits plans, you need to register as a vendor and get a vendor permit.

To register, you can:

Download: Application for Vendor Permit - Insurance and Benefits Plans

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 may be eligible for a refund if:

  • RST was incorrectly charged on insurance premiums or benefits plans
  • you paid RST in error when transferring a vehicle at  ServiceOntario

To request a refund

  1. download and complete a refund application form
  2. send it to the Ministry of Finance within four years from the date you paid the RST
  3. include:
    • all supporting documents
    • proof that RST was paid

Download: Application for Refund of Retail Sales Tax on Insurance or Benefit Plan Premiums

Download: Application for Refund of Ontario Retail Sales Tax for Motor Vehicles Purchased Privately

Direct bank deposit

Get your Ministry of Finance refund or rebate faster with direct deposit! It's easy and secure.

Download: Direct Deposit Request / Direct Deposit Authorization

Clearance Certificates

If you are selling assets of your business in bulk, such as fixtures, goods or chattels, you must request a Clearance Certificate or equivalent Certificate Letter from the Ministry of Finance.

Why it’s required

Before you can get a Clearance Certificate, you must pay all taxes owed under the following laws:

  • Liquor Tax Act, 1996
  • Fuel Tax Act
  • Gasoline Tax Act
  • Race Tracks Tax Act
  • Retail Sales Tax Act
  • Tobacco Tax Act

The Clearance Certificate confirms that:

  • all taxes, penalties and interest collectable or payable by you, the seller, have been paid
  • you have made satisfactory arrangements to pay or secure the amount owing

A Certification Letter is issued as proof of due diligence when the search reveals no Retail Sales Tax history.

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.

How to request a Clearance Certificate

All requests for Clearance Certificates must be made in writing, at least two weeks before the sale takes place.

Signed authorization must be given by the seller (Director, Sole Proprietor or Partner), to allow a Third Party to make the request and obtain the reply letter on their behalf.

Send your request by:

Read on: Clearance Certificate Checklist