Effective July 1, 2010, Ontario harmonized its retail sales tax
(RST) with the federal goods and services tax (GST) to form a
harmonized sales tax (HST). However despite harmonization, some
rules in Ontario's Retail Sales Tax Act (RSTA)
continue to have application today.
Bulk Sales - Agreements on or before March 29,
Section 6 of the RSTA requires each person who disposes of
"stock through a sale in bulk to which the Bulk Sales Act,
Ontario applies" to obtain a Clearance Certificate from
the Ministry of Finance before the disposition, where the sale is
pursuant to a written agreement entered into on or before March 29,
2011. In most cases, the sale of all or part of a business will
trigger the application of the Bulk Sales Act,
The purpose of section 6 is to ensure that all RST collectable
or payable by the seller is remitted to the government before the
sale or closure of a business. To achieve this, section 6 requires
the purchaser to obtain a copy of the Clearance Certificate from
the seller. Failure to do so will cause the purchaser to be liable
for any RST owing by the seller at the time of the sale.
If RST is owed by the seller, the Ministry of Finance may
require funds to be held back from the proceeds of the sale prior
to issuing the Clearance Certificate. Alternatively, the seller may
be asked to agree in writing to a condition being placed on the
Despite the foregoing requirements, the seller and the purchaser
may agree to proceed with the sale without obtaining a Clearance
Certificate from the Ministry of Finance. Doing so, however, puts
the purchaser at risk of being liable for any RST owing by the
seller as of the date of the sale and should be avoided if
Taxable Insurance Premiums
Insurance premiums are exempt from GST and consequently, receive
the same treatment under HST. However, since RST applied to
premiums for certain types of insurance prior to harmonization, the
Ontario government decided to continue applying RST at a rate of 8%
to premiums on the same types of insurance (e.g. group insurance,
benefit plans, insurance schemes/ compensation funds established
under any Act of Canada or Ontario).
Insurance that was previously exempt from RST, such as
automobile insurance premiums, continue to be exempt from RST after
harmonization. Certain costs and fees, such as administration fees
for benefit plans, are exempt from RST since they are taxed under
Private Sales of Specified Vehicles
While HST now applies to purchases of specified vehicles (e.g.
motor vehicle, off-road vehicles, motorized snow vehicles,
aircrafts or vessels) from a GST/HST registrant, RST at a rate of
13% continues to apply to purchases of specified vehicles from a
person who is not a GST/HST registrant, with some exceptions (e.g.
transfers between family members, etc.).
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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