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O. Reg. 284/03: DEFINITIONS BY MINISTER, EXEMPTIONS, FORMS AND REBATES

filed July 7, 2003 under Retail Sales Tax Act, R.S.O. 1990, c. R.31

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ontario regulation 284/03

made under the

retail sales tax act

Made: June 26, 2003
Filed: July 7, 2003
Printed in The Ontario Gazette: July 26, 2003

Amending Reg. 1012 of R.R.O. 1990

(Definitions by Minister, Exemptions, Forms and Rebates)

Note: Since the end of 2002, Regulation 1012 has been amended by Ontario Regulation 189/03.  Previous amendments are listed in the Table of Regulations published in The Ontario Gazette dated January 18, 2003.

1. The title to Regulation 1012 of the Revised Regulations of Ontario, 1990 is revoked and the following substituted:

definitions, exemptions and rebates

2. The Regulation is amended by adding the following section:

Rebate under Clause 48 (3) (q) of the Act

31.1 (1) Subject to subsection (12), the Minister may rebate to the owner of an eligible electricity generating facility or eligible deep lake-water cooling facility an amount with respect to the tax paid under the Act in respect of eligible tangible personal property,

(a) that is purchased and incorporated after November 25, 2002 and before January 1, 2008 into an eligible electricity generating facility that is not a qualifying nuclear facility or into an eligible deep lake-water cooling facility; or

(b) that is purchased and incorporated after June 1, 2003 and before January 1, 2008 into an eligible electricity generating facility that is a qualifying nuclear facility.

(2) The following property is eligible tangible personal property for the purposes of clause 48 (3) (q) of the Act and this section:

1. Tangible personal property that is incorporated into an eligible electricity generating facility, but not tangible personal property that is otherwise eligible for exemption under the Act.

2. Tangible personal property that is incorporated into an eligible deep lake-water cooling facility, but not tangible personal property that is otherwise eligible for exemption under the Act.

(3) In this section,

“alternative or renewable source of energy” has the same meaning as in section 204 of Regulation 183 of the Revised Regulations of Ontario, 1990 (General) made under the Corporations Tax Act;

“district cooling” means the cooling of more than one building through the distribution by underground pipes of cooling fluid from a central location;

“district heating” means the heating of more than one building through the distribution by underground pipes of steam or heated water from a central location;

“eligible deep lake-water cooling facility” means a facility in Ontario, including qualifying property, that uses the constantly cold water found at the bottom of a lake to cool the fluid circulated through a district cooling system; 

“eligible electricity generating facility” means a facility in Ontario, excluding residential premises and multi-residential premises and including qualifying property incorporated into the facility,

(a) that is substantially used to generate electricity all or substantially all of which is generated from alternative or renewable sources of energy, and

(b) that generates the electricity for its own consumption or for delivery to a person in Ontario or to the IMO-controlled grid, and

(c) that is not a non-qualifying nuclear facility;

“IMO-controlled grid” has the same meaning as in subsection 2 (1) of the Electricity Act, 1998;

“non-qualifying nuclear facility” means a nuclear facility that is not a qualifying nuclear facility;

“owner” includes, in respect of an eligible deep lake-water cooling facility or an eligible electricity generating facility, the lessee of the facility;

“qualifying nuclear facility” has the same meaning as in section 204 of Regulation 183 of the Revised Regulations of Ontario, 1990 (General) made under the Corporations Tax Act;

“qualifying property” means,

(a) tangible personal property used to deliver electricity to a person in Ontario or to the IMO-controlled grid,

(b) tangible personal property used to convey water to a hydro-electric turbine or to a reservoir that supplies water to a hydro-electric turbine,

(c) tangible personal property used to collect water for a deep lake-water cooling facility or to distribute fluid through a district cooling system, and includes production machinery and equipment that is not otherwise eligible for exemption under the Act, and

(d) tangible personal property used in the distribution of steam or heated water for the purposes of district heating.

(4) For the purposes of the definition of “eligible electricity generating facility”, the facility is substantially used to generate electricity if the total useful energy output of the facility is at least 20 per cent of the total energy input to the facility, and if the electrical energy output of the facility is at least 25 per cent of the total useful energy output of the facility.

(5) The amount of the rebate is determined as follows:

1. If the eligible tangible personal property was purchased by the owner of the eligible electricity generating facility or eligible deep lake-water cooling facility, the amount of the rebate is the amount of the tax paid under the Act by the owner in respect of the eligible tangible personal property.

2. Subject to subsection (6), if the eligible tangible personal property was purchased by a contractor and incorporated into the eligible electricity generating facility or eligible deep lake-water cooling facility under a written construction contract, the amount of the rebate is determined as follows:

i. For payments made by the owner of the facility in satisfaction of the contract price that are subject to the tax imposed by Part IX of the Excise Tax Act (Canada), 3 per cent of the sum of those payments and that tax.

ii. For all other payments made by the owner of the facility in satisfaction of the contract price, 3.4 per cent of those payments.

(6) The payments referred to in paragraph 2 of subsection (5) that are used to calculate the amount of a rebate under this section shall not include any amount paid under the construction contract that can reasonably be attributed to the following:

1. Land or land improvement cost.

2. The cost of obtaining a performance bond.

3. Charges for development or for project consulting services.

4. Architect’s fees.

5. Building permit fees.

6. Charges for temporary facilities.

7. The costs of demolition.

8. Equipment rental charges.

9. The cost of tangible personal property that may be exempt from tax under the Act otherwise than under this section.

(7) If the amount of the rebate is determined under paragraph 2 of subsection (5) and the owner of the facility establishes that the amount of the rebate determined under that paragraph is less than the amount of the tax paid under the Act by the contractor on the purchase of the eligible tangible personal property, the amount of the rebate is the amount of the tax paid by the contractor.

(8) The Minister of Energy or his or her delegate may give opinions to taxpayers or to the Minister of Finance relating to engineering and scientific matters raised in the interpretation of the definitions in subsection (3) and in the interpretation of subsection (4) or (5), and any opinion given by the Minister of Energy or his or her delegate with respect to those matters is conclusive for the purposes of this section.

(9) If the construction contract requires that progress payments on account of the contract price be made by the owner, the rebate may be paid by instalments equal to the appropriate percentage of each progress payment made by the owner.

(10) If an eligible electricity generating facility ceases to be an eligible electricity generating facility on or before the fourth anniversary of the last rebate payment made under this section in respect of the facility, the owner shall repay the amount of the rebate in full at the time and in the manner specified by the Minister.

(11) For the purposes of subsection (10), an eligible electricity generating facility ceases to be an eligible electricity generating facility if more than 10 per cent of the electricity generated by the facility in a year, other than amounts conveyed to the IMO-controlled grid, is used outside Ontario. 

(12) No rebate is payable under this section unless an application for the rebate,

(a) is made in writing and includes such information and documents as the Minister may specify; and

(b) is made before the fourth anniversary of the day on which the tax or payment under the contract was made to which the rebate relates.

Janet Lynne Ecker

Minister of Finance

Dated on June 26, 2003.