The HST Blog : Canada Harmonized Sales Tax Lawyer Cyndee Todgham Cherniak for Assessments, PST & RST Issues in Ontario, British Columbia & Quebec

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Ontario retail sales tax ("ORST") was not imposed on electricity and residential heating fuels.  ORST was imposed on "tangible personal property", which was defined in the Retail Sales Tax Act (Ontario) (ORSTA) as "personal property that can be seen, weighed, measured, felt or touched, or that is in any way perceptible to the senses, and includes ... natural gas and manufactured gas." 

To the extent that the following forms of residential heating were captured by the definition of "tangible personal property, the ORSTA contained a specific exclusion to ensure they were not subject to ORST:

• Gasoline (because it was taxed and remains taxed under the Gasoline Tax Act (Ontario);
• Fuel (because it was taxed and remains taxed under the Fuel Tax Act (Ontario);
• Fuel oil (because it was taxed and remains taxed under the Fuel Tax Act (Ontario);
• Coal;
• Coke (not the soda pop variety);
• Wood;
• Natural gas and manufactured gas (as defined by the Minister);
• natural water (including ice and steam);
• Electricity of all purposes; and
• Ethanol or methanol that is sold and purchased as fuel to generate power by internal combustion.

When HST was implemented in Ontario on July 1, 2010, these exemptions disappeared and the list above became subject to HST.  The increase is tax payable by consumers was the 8% PVAT rate.

What some people do not realize is that the fuel tax and gasoline tax, to the extent it applied before July 1, 2010, continues to apply.  In other words, the amount of tax payable increased because the McGuinty Government did not repeal the Fuel Tax Act or the Gasoline Tax Act.

In addition, HST will apply to services provided by an energy supplier and administrative charges, such as:

• connection or disconnection of a service or equipment,
• installations, inspection, testing, maintenance or repairs,\relocation or upgrades of a service or equipment,
• analysis of the use of an energy product;
• activation or cancellation of an account,
• late payments,
• interest,
• returned or dishonoured payments,
• method of payment,
• account adjustments,
• account information,
• franchise fees; and
• Equipment-related charges, including charges relating to equipment purchased or leased by the person acquiring the energy product.

So, if you are wondering what changed - there you have it.  Premier McGuinty had the option on ensuring that you did not pay more on essentials such as electricity and residential heating - he made a choice not to give consumers a break.  Premier McGuinty and Minister Dwight Duncan had (has) the option in the Comprehensive Integrated Tax Cooperation Agreement (the agreement between Ontario and the Government of Canada re harmonization) to select point of sale rebates (meaning the supplier does not have to collect the PVAT portion of the HST).  McGuinty and Duncan decided Ontarians can and will pay HST on electricity and home heating.

Premier Campbell, who is resigning in part because of HST did agree to a form point of sale rebate (called a Residential Energy Credit) for residential electricity and home heating. Energy products qualifying for the Residential Energy Credit are electricity, natural gas, propane, heating oil (including bio diesel or similar renewable fuel), kerosene, heat and steam.

These are the facts folks ... Please do not shoot the messenger ... use this information instead.