The province of Manitoba has revised several information bulletins and notices to clarify the application of retail sales tax and to update taxpayers regarding the administration of commodity taxes in the province.
Information Bulletin No. 005, “Information for Contractors” explains the retail sales tax (RST) requirements affecting contractors, and has been revised to reflect a change to the formula for calculating tax on equipment used temporarily in the province. The temporary use formula for owned equipment is now based on the number of days that the property is temporarily used or available for use in Manitoba, versus the prior formula of 1/36th of the taxable value per month of use. For leased equipment, where equipment is only in Manitoba for part of a month, the taxable lease payment can be reduced in proportion to the number of days it was not used or available for use in the province.
Information Bulletin No. 013, “Off-Road Vehicle and Boat Dealers” provides information to help off-road vehicle and boat dealers apply RST on their sales of off-road vehicles and boats, parts and repair services. The bulletin has been revised to clarify that when a dealer passes on the fee for registering a lien under The Personal Property Security Act, no RST applies if the fee is: not marked up by the dealer; segregated on the invoice; and payable by the customer at the time of delivery of the off-road vehicle or boat. In addition, no RST applies on repossession or collection agency charges.
Rental charges for off-road vehicles and boats provided with an operator are exempt from RST. However, dealers providing these types of rentals are responsible for paying RST on the purchase of these off-road vehicles and boats, including related parts and repair services. In addition, an RST exemption is available to commercial fishers for commercial fishing boats, outboard motors, fishing nets and other apparatus that are used solely in commercial fishing. To support the exemption, dealers must record the purchaser’s commercial fishing license number on the sales invoice, along with a signed statement from the purchaser that the items will be used solely for commercial fishing purposes.
Dealers are required to pay RST on costs (excluding employee labour) to repair and maintain off-road vehicles or boats purchased or modified for dealer use. However, no RST applies to repairs on merchandise acquired for resale and used temporarily as dealer-use off-road vehicles and boats.
The bulletin also discusses circumstances where customers may be eligible for refunds of RST, such as buy-sell refunds, non-resident purchasers who remove an off-road vehicle within 30 days and certain purchases by farmers.
Information Bulletin No. 023, “Service, Maintenance and Warranty Contracts” explains the application of RST on contracts that provide for service, maintenance or warranty of tangible personal property. Generally, RST applies to service contracts for taxable tangible personal property (“TPP”) whether the contracts are purchased together with the new or used TPP; separately (or at a later date); or as a condition of sale or lease of TPP.
The bulletin now explains that certain travel and living expenses related to the supply of services may be charged to the customer exempt of RST, where they are charged on a cost recovery basis, they are segregated on the invoice, and any applicable RST has been paid. However, any stand-by charges for securing availability of service and maintenance personnel in case of a breakdown are subject to RST.
Where a service contract is cancelled by the customer prior to the expiry date of the contract period, and a portion of the purchase price is refunded to the purchaser, the corresponding tax may also be refunded. For manufacturer’s warranty service, replacement parts or services required to perform a service under a manufacturer’s recall are not taxable. In addition, where repairs are performed as part of an unwritten or implied warranty, the parts or labour used to perform these services may be purchased exempt of RST. The vendor must record the work as having been done under warranty to support the exemption.
Furthermore, the guide lists specific types of services performed on exempt TPP that are not taxable.
Information Bulletin No. 030, “Summary of Taxable and Exempt Goods and Services” provides a summary of both taxable and exempt goods and services, with a focus on the types of goods that are exempt and the types of services that are taxable under the Act. The bulletin has been updated to clarify that the following supplies are exempt from RST:
- filled sandbags, sandbag filling services, flood tubes, cage flood barriers and certain sand/salt mixtures for flood control;
- biomass products made 100% from wood, wheat, flax, oats, barley, sunflower, hemp or corn, when purchased for use as a fuel for heating or cooking;
- kiln strips used in the manufacturing of wood products;
- certain goods purchased for use in manufacturing a product for sale by manufactures; and
- certain goods used in mining or processing minerals for sale as mineral products by the mining industry
In addition, the bulletin’s list of services that are not subject to RST now includes laboratory testing or inspecting of goods not connected to a repair or other taxable services to the goods, and appraisals of the value of goods.
Manitoba also released four Information Notices related to exemptions available to Status Indians and Indian bands.
Information Notice, “Sales Tax Exemption for Status Indians and Indian Bands” explains the RST exemption and documentation requirements for goods purchased by a Status Indian or Indian Band, where the vendor delivers goods directly, or by common carrier, to a reserve. Manitoba RST will apply on the sale of taxable goods where: the purchaser takes possession of the goods off-reserve at the time of sale; sales are made to a corporation owned by a Status Indian or Indian Band; or goods are leased to a Status Indian who resides off-reserve.
Information Notice, “Exempt Sales to Status Indians – Temporary Confirmation of Registration Document” discusses the new Temporary Confirmation for Registration Document that has been issued to individual registered Indians by the Department of Aboriginal Affairs and Northern Development Canada and how it may be used as documentation to support exempt sales to Status Indians.
Information Notice, “Sales by Businesses Located on a Reserve” explains the application of RST for businesses located on a reserve, including the documentation requirements to support exempt sales to Status Indians and Indian Bands and the requirement to collect RST on taxable sales.
Information Notice, “Fuel Tax Exemption for Status Indians and Indian Bands” summarizes the fuel tax exemption and documentation requirements for fuel purchased by a Status Indian or Indian Band from a retail fuel dealer located on a reserve.