Purchase Exemption Certificates for Retail Sales Tax

Act: Retail Sales Tax Act

To Whom Does This Apply?

Eligible Area

Province of Ontario

Summary

Purchase Exemption Certificates (PECs) are to be completed by persons entitled to claim an exemption from RST on the purchase of taxable goods and taxable services or entering into a contract of insurance or a benefits plan. A ‘valid purchase exemption certificate’ means a single or blanket PEC that a person is authorized to use and that contains all the required information, under the  Retail Sales Tax Act .

1. Use of Purchase Exemption Certificates

Examples of items that can be purchased by persons who qualify for exemption include the following:

• Equipment, as defined under the  Retail Sales Tax Act  (the Act ), that is to be used by a religious institution exclusively in that part of its premises where religious worship or Sabbath school is regularly conducted;
  
• Farm equipment, farm tools, and farm machinery, as defined under the Act, that are to be used by a person engaged in the business of farming as well as building supplies and materials used to build, repair or modernize structures used exclusively for farm purposes. Instead of a PEC, farmers may use a Farmer Identification (ID) card, issued by a general farm organization (GFO), to claim an exemption from RST (See RST Guide 807 - Farmers);
  
• Hospital equipment, as defined under the Act, used exclusively by The Ontario Cancer Treatment and Research Foundation, or by a hospital that is approved as a public hospital under the  Public Hospitals Act , or by a hospital that is established under the  Community Psychiatric Hospitals Act  or a facility approved or established as a psychiatric facility under the  Mental Health Act ;
  
• Machinery and equipment, as defined under the Act, used by a qualifying manufacturer in the production of tangible personal property;
  
• Taxable goods and certain taxable services purchased by vendors or wholesalers for resale to others;
  
• Certain contracts of insurance or benefits plans.

Note: Vendors are not entitled to claim an exemption on items used for their business or for their own use unless an exemption is provided for under the Act. Purchase Exemption Certificates cannot be used by customers to claim an exemption from RST on real property contracts or on fixtures.

The following are examples of when goods and services can be purchased exempt from RST without having to complete a Purchase Exemption Certificate:

• When goods, such as food products, are unconditionally exempt under the Act, i.e. all customers are exempt from the payment of RST;
  
• When suppliers ship the customer's goods directly out of the province and keep proof of the shipment on file to support a tax-exempt sale;
  
• When suppliers sell goods to vendors whose Vendor Permit number ends with a "G". Holders of "G" permits include the federal government and some large corporations.  The Vendor Permit number must be noted on purchase orders.

2. Purchase Exemption Certificate Forms

Supplies of PEC forms are not provided by the Ministry of Revenue since it is not a prescribed form.  Vendors or taxpayers who need more forms may use photocopies or reproductions of the sample "Purchase Exemption Certificate" which may obtained from the nearest Tax Office.

Purchase Exemption Certificates can be used in the following ways:

• Single Purchase Certificates: When you need an exemption for only one order of goods, taxable services, or for contracts of insurance or benefits plans;
  
• Multiple Purchase Certificates (Blanket): For repeat orders of the same taxable goods or taxable services from the same supplier, or for contracts of insurance or benefits plan, write or insert the word “Blanket” on the form beside “Purchase Exemption Certificate” or check the “Blanket” box. A blanket certificate is valid until revoked by the issuer or cancelled by the Minister of Finance, whichever occurs first.
  
• Purchase Orders: If purchase orders are issued, a reference to the blanket certificate or Identity Card issued for above items must be typed, written, or stamped on the purchase order. A sample "Blanket Purchase Exemption Certificate Reference" may be obtained from the nearest Tax Office. 

3. Information Required on Purchase Exemption Certificates

A valid single purchase or multiple purchase (blanket) certificate must show:

• date
• name, address, and nature of the business
• business name
• name of authorized person
• business address
• Vendor Permit/International Registration Plan carrier account number (if applicable)
• reason exemption is being claimed

Note: A blanket certificate is valid until revoked by the person or until cancelled by the Minister of Finance. A person who issues a blanket PEC can revoke it if any information was omitted or is not currently correct. The person may then issue a replacement PEC with the correct information. The Minister may cancel a PEC if the person who provided it is not entitled to use it.

4. Use of Valid Identity Cards instead of PECs

Valid identity cards may be used by authorized persons entitled to claim an exemption from RST on the purchase of taxable goods and taxable services, or entering into a contract of insurance or a benefits plan.

Farmer ID Card

Instead of a PEC, farmers may use a Farmer ID card, issued by a GFO, to claim an exemption from RST on eligible farm-related goods, services and insurance. The Farmer ID card shows the farmer’s name and Farm Business Registration number. Farmer ID cards are currently issued by the Ontario Federation of Agriculture, Christian Farmers Federation of Ontario, and the National Farmers Union. Farmers who do not hold a Farmer ID card, choose not to be members of a GFO, or fail to provide the supplier with a Farmer ID card may issue a valid PEC to the supplier.

For further information:
visit the website:  RST Guide 807 - Farmers

Foreign States, Representatives and Officials

The Office of Protocol, Department of Foreign Affairs and International Trade (Canada) (FAITC) authorizes certain entities and persons to receive an exemption from RST on the purchase of taxable goods or taxable services. FAITC issues multi-coloured identity cards to recognize foreign representatives and officials in Canada. Not all identity card holders are entitled to an RST exemption.

For further information:
visit the website:  RST Guide 803 - Foreign States, Representatives and Officials

Status Indians, Indian Bands and Band Councils

Status Indians hold “Certificate of Indian Status” identity cards issued by the federal government under the Indian Act (Canada). These cards are numbered and contain the photograph, name, and Indian band or registry number of the card holder. To claim an exemption, Status Indians must show suppliers their federal ‘Certificate of Indian Status’ identity card. Indian bands and band councils must provide the supplier with a valid PEC.

For further information:
visit the website:  RST Guide 808 - Status Indians, Indian Bands and Band Councils

CNIB Membership Card

Persons who are legally blind can purchase audio books for their own use exempt from RST by showing their Canadian National Institute for the Blind (CNIB) membership card to the supplier at the time of purchase. Audio books in any form such as CDs or cassettes qualify, as long as the audio book is a spoken reading of a book. Friends and family members can also purchase audio books on behalf of a blind person by showing the blind person’s CNIB membership card to the supplier. The exemption will be given to them provided they confirm they are buying the audio book for the use of a legally blind person.

For further information:
visit the website:  Audio Books Purchased by Persons Who are Legally Blind

5. Suppliers' Responsibilities

Suppliers are required to charge RST on taxable goods, taxable services, or taxable contracts of insurance or benefits plan whenever persons do not provide a PEC or do not provide a valid identity card. If a Vendor Permit number is provided by a person who is not a ‘G’-Permit holder or who does not already have a valid PEC on file with the supplier, RST must be charged.

A supplier who is a registered vendor may refund RST if the person buying the goods gives a valid PEC or a valid identity card to the supplier, after being charged the RST on goods purchased for resale.

Suppliers must maintain a record of all PECs provided by purchasers, and the name and number or other identifier on each identity card presented to support sales where no RST was charged. See the Ministry Tax Information Bulletin entitled, Retention/Destruction of Books and Records , or contact the nearest Ontario Ministry of Revenue Tax Office to determine when these records can be destroyed.

6. Penalty

If a person misuses a PEC or makes a false statement on a PEC, the person can, on conviction, be fined not less than $1,000 and an amount up to twice the RST owed, or imprisonment for up to two
years, or both.

This document is based on information from the Ministry of Revenue's Purchase Exemption Certificates  fact sheet dated October 2005.

• List of Fact Sheets
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DISCLAIMER
Information contained in this section is of a general nature only and is not intended to constitute advice for any specific fact situation. For particular questions, the users are invited to contact their lawyer. For additional information, see contact(s) listed below.

Ontario Contact(s):
Hamilton Tax Office
Ontario Ministry of Revenue - MOR
15th Floor
119 King Street West
Hamilton, Ontario  L8P 4Y7
Telephone: 905-521-7504
Fax: 905-521-7868
Toll-free (information): 1-800-263-9229

Kitchener Tax Office
Ontario Ministry of Revenue - MOR
1st Floor
305 King Street West
Kitchener, Ontario  N2G 1B9
Telephone: 519-576-8400
Fax: 519-571-6100
Toll-free (information): 1-800-265-2303

London Tax Office
Ontario Ministry of Revenue - MOR
Dufferin Coporate Centre
130 Dufferin Avenue
Suite 400
London, Ontario  N6A 6G8
Telephone: 519-433-3901
Fax: 519-661-6618
Toll-free (information): 1-800-265-1540

Mississauga Tax Office
Ontario Ministry of Revenue - MOR
Suite 200
77 City Centre Drive
Mississauga, Ontario  L5B 1M5
Telephone: 905-273-9490
Fax: 905-949-3389
Toll-free (information): 1-800-265-9969

North Bay Tax Office
Ontario Ministry of Revenue - MOR
Suite 102
447 McKeown Avenue
North Bay, Ontario  P1B 9S9
Telephone: 705-474-4900
Fax: 705-495-3805
Toll-free (information): 1-800-461-1564

Oshawa Head Office
Ontario Ministry of Revenue - MOR
33 King Street West
Oshawa, Ontario  L1H 8H5
Telephone: 905-436-4561
Fax: 905-436-4474
Toll-free (information): 1-800-265-9005

Ottawa Tax Office
Ontario Ministry of Revenue - MOR
Suite 300
1400 Blair Place
Gloucester, Ontario  K1J 9B8
Telephone: 613-746-9200
Fax: 613-842-3593
Toll-free (information): 1-800-461-4909

Thunder Bay Tax Office
Ontario Ministry of Revenue - MOR
3rd Floor
130 South Syndicate Avenue
Thunder Bay, Ontario  P7E 1C7
Telephone: 807-625-5840
Fax: 807-625-5848
Toll-free (information): 1-800-465-6699

Toronto Tax Office
Ontario Ministry of Revenue - MOR
Suite 200
5 Park Home Avenue
North York, Ontario  M2N 6W8
Telephone: 416-222-6246
Fax: 416-218-3738
Toll-free (information): 1-888-565-6433

Whitby - Retail Sales Tax Refunds
Ontario Ministry of Revenue - MOR
2nd Floor
1600 Champlain Avenue
Whitby, Ontario  L1N 9B2
Telephone: 905-432-3431
Fax: 905-435-3543
Toll-free (information): 1-800-615-2757

Windsor Tax Office
Ontario Ministry of Revenue - MOR
Unit 103
215 Eugenie Street West
Windsor, Ontario  N8X 2X7
Telephone: 519-250-0066
Fax: 519-972-2950
Toll-free (information): 1-800-465-4021