Ontario budget includes proposal to change truck sales tax calculation

TORONTO (May 14, 2001) — Ontario’s 2001/02 budget includes a proposal to replacing the existing sales tax on trucks that operate outside of Ontario with an annual prorated sales tax be collected yearly at the time of registration.

The Recurring Sales Tax (RST) tax would be calculated on the vehicle’s purchase price and the distance traveled in Ontario by the vehicle during the previous year, the Ontario Trucking Association reported in a press release. Normal Provincial Sales Tax (PST) would apply to those vehicles being used exclusively in Ontario.

This tax treatment is similar to the systems in place in British Columbia, Saskatchewan, and Manitoba.

This tax would be collected through the registration process of the International Registration Plan, which Ontario implemented April 1.

Under this proposal, trailers, repair parts, and labor services for trucks registered under IRP would be exempt from PST at the time of purchase. For trailers, repair parts and labour services for trucks used exclusively in Ontario the normal PST will continue to apply.

“OTA’s preferred approach to sales tax reform — which is long overdue — would be harmonization with GST, or a straight exemption. However, the proposed RST is worthy of consideration and OTA has engaged tax professionals to help us analyze this form of taxation,” said OTA president David Bradley.

The association said the government is adopting this measure to recover some the revenue that it would lose as a result of OntarioÕs membership in IRP. By implementing this change U.S. carriers operating in Ontario will be required to pay sales tax (based on the number of miles they travel in Ontario) as well as Ontario carriers.