Is Ontario Business Obligated to Accept PST Exempt Certificate?

[dipmicro]

I always thought we have a choice not to accept PEC but now have a customer who tells me we have to. I was reading Ministry of Revenue website but it's pretty wague about the "obligation".

If this is an obligation, I am wondering what would cashier in Dolarama do, if one of their eBay resellers brings them PEC 😉

[pierrelebel]

In general terms, sellers with an Ontario Vendor Permit accept a PST exemption certificate and do not charge tax at time of sale.

That applies to most retailers. Cashiers at WalMart are well trained on the subject. Other retailers may not provide the same level of training.

[dipmicro]

Thanks Pierre!

This is new to me, I was always the one handing out the PEC before.

[pierrelebel]

For more information from the Ontario government, check this http://www.rev.gov.on.ca/en/guides/rst/pdf/204.pdf

[dipmicro]

Yes, I found that text. It does not talk about requirement to accept the PEC. Nor does the Retail Sales Tax Act. Or I missed it ...

I am going to accept it. Seems to be no big deal with the books.

Thank you for looking into this!

[recped]

You should also be aware that the person/company giving you the exemption certificate doesn't have to be registered or have a vendors permit number.

[futuretech_liquidations]

In our case we only accept the PST exemption certificate for large orders (+$500) and in most cases its not a problem.Usually not a problem for most cases but then again you do get the odd customer that wants to use to PST certificate for a less than $100 sale -- those are the ones we politely decline to accept the certificate.

Regards,

TIM @ FTL

[dipmicro]

those are the ones we politely decline to accept the certificate

That's my original question, because my customer claims I have to accept his certificate. While I decided to accept it on his $150 order, this question is still pending.

[coxengines]

In BC you are technically not obligated but good business sense dictates that you do.

However, the onus is on the seller to ensure it's a valid #.

Once this is ascertained, the seller is off the hook and whether the buyer actually resells the merchandise is a CRA issue and not the sellers.

Bernie

[recped]

That's my original question, because my customer claims I have to accept his certificate. While I decided to accept it on his $150 order, this question is still pending.

Is there a reason why you wouldn't accept it? I can't think of any reason not to.

However, the onus is on the seller to ensure it's a valid #.

I can only comment about Ontario, when a customer gives you a signed form THEY are the ones responsible to ensure that they are entitled to claim an exemption. As I mentioned previously one can be exempt without having a Vendors Permit No.

Companies that do not do ANY retail sales have no need nor any requirement to have a Vendors Permit but they can still purchase PST exempt by completing the form.

On the form, In the area for the permit no it says "Permit Number (If Applicable)".

It will all be ancient history for Ontario businesses come next July.

[dipmicro]

Is there a reason why you wouldn't accept it?

Read above post from futuretech. My books are spreadsheet and I have to introduce a new "PEC" field so I do not come wondering in two months - "Why in the world did we not charge PST on this one".

Anyway, once the books are updated, I have no reason not to.

It will all be ancient history for Ontario businesses come next July.

Cant wait. I hate PST.

[coxengines]

when a customer gives you a signed form THEY are the ones responsible to ensure that they are entitled to claim an exemption

I would be careful with that. Customer buys a $50,000 automobile, claims exemption, gives a false #. 100% is the dealer on the hook for the PST.

It may be different in Ontario but I have my doubts.

Bernie

[dipmicro]

is the dealer on the hook

So you are required to scrutinize the exemptions?

That's the good reason for not accepting them right there 😉

[coxengines]

It's not an issue with small amounts and the chance of a CRA audit and it being a fake # are extremely slim.

Our other business is the export and wholesale of automobiles and that is where we are more careful with new buyers claiming exemption.

Bernie

[recped]

In Ontario it's very clear.

Check this page: www.rev.gov.on.ca/en/tax/rst/faq_purchase.html

Vendors are not responsible for verifying that the customer is entitled to issue a PEC. (Purchase Exemption Certificate)

[coxengines]

That is indeed very clear, recped. Thanks for pointing that out.

Bernie