Ontario has issued this notice to explain how retail sales tax applies to environmental fees passed on to consumers of electrical and electronic equipment (“EEE”) under the Waste Electrical and Electronic Equipment (WEEE) Program Plan. As of April 1, 2009, an environmental fee is imposed by Ontario Electronic Stewardship (“OES”) on industry stewards (manufacturers, first importers or franchisors) that distribute or sell EEE products.
Ontario Retails Sales Tax does not apply to the fee payable to OES as the charge by the organization is not in respect of taxable goods or services. However, if an industry steward recovers the cost of the stewardship fee by passing it on to retailers, the fee forms part of the fair value of the products sold. In turn, if retailers choose to recover this fee in the form of higher prices or a separate charge on a customer’s invoice, the cost forms part of the fair value of the taxable product and/or service and is subject to retail sales tax.