News and Insights

Ontario Tax Tip, “Prepare for Ontario’s HST: # 19 – Purchase Exemption Certificates”

Tax Development Aug 27, 2010

Ontario has issued this tax tip to help purchasers of insurance products understand when a valid Purchase Exemption Certificate (PEC) may be used.  Retail Sales Tax (RST) continues to apply to contracts of insurance or benefit plans covering risks in Ontario after June 30, 2010.  Purchasers may be entitled to an exemption from RST under certain conditions, and must provide the seller with a valid PEC.  

The following are examples where a purchaser may acquire insurance products exempt of RST by issuing a PEC: 

  • insurance covering agricultural products, structures, equipment, livestock and recreational equipment purchased by a person actively in the farming business;
  • cargo insurance for the portion where the risk is outside of Ontario;
  • insurance covering aircraft, where the purchase of the aircraft was exempt from RST; and
  • contracts of insurance entered into by Indian Bands or Band Councils.  

ON HST Tax Tip No 19