QUEEN'S PARK, Ont. - When Jim Flaherty was named Ontario's Minister of Finance, the trucking industry applauded the Premier's decision.It collectively salivated at the prospect of no longer having to ...
QUEEN’S PARK, Ont. – When Jim Flaherty was named Ontario’s Minister of Finance, the trucking industry applauded the Premier’s decision.
It collectively salivated at the prospect of no longer having to deal with Ernie Eves, whose personal ties to the industry prevented any meaningful dialogue, to say nothing of tax reductions.
On Aug. 16, the benefit was clear as the minister announced proposed changes to the Retail Sales Tax (RST) charged on iron signed up to participate in the International Registration Plan (IRP). The deal will remove Ontario’s onerous eight per cent Retail Sales Tax charge on these transborder vehicles, including trucks, trailers and buses, replacing it instead with a new Multijurisdictional Vehicle (MJV) tax. The MJV tax is calculated by using the formula, VTV x R x OTR x M; where VTV is the vehicle’s taxable value, R is the applicable tax rate (see chart above), OTR is the ratio of mileage run in Ontario, and M is the number of months the vehicle is registered in IRP divided by 12. (This final one is simply used to prorate equipment not registered for the entire year.)
The proposal can only come into effect by proclamation of the Lieutenant Governor and is targeted for Oct. 1. In addition, parts and service for IRP-plated rigs would also be completely RST exempt.
One of the groups claiming victory after the announcement is the Oshawa, Ont.-based National Truckers Association.
Its president, Bill Wellman, contends his efforts were instrumental in getting the tax rates reduced.
“Initially the first year was going to be at 3.699 per cent,” he says. “I went down to Queen’s Park and met with Flaherty, I was there during the budget lockup … He said he would lower it.”
Wellman is happy industry was involved in the process and says IRP is going to make life much easier for his members.
“You don’t want to pull up to some hicktown scale house just outside California and find out you have to pay so many dollars to continue on,” says Wellman.
His group may have helped with the tax changes in the stretch run, but the bulk of this race was run by the Ontario Trucking Association (OTA).
The group’s president David Bradley explains this marks the culmination of about a year of negotiations regarding the death of RST.
Carriers and O/Os hoping to take advantage of the new law must first register for IRP at any Ontario Ministry of Transportation Prorate Office, you’ll need to bring along travel distance information as well as a bill of sale or lease agreement for each vehicle you’re registering. The MJV tax is paid directly to these same locations.
In some cases, MJV tax credits will be available on equipment that had the old retail tax charged against it or in the event it changes fleets.
Call the Retail Sales Tax Branch at 905-433-6314 to find out if it applies to your equipment.
Flaherty says the government is committed to cutting business and personal taxes, which will help Ontario businesses expand and create jobs.
“By staying the course and continuing to cut business and personal taxes, we are creating an environment in Ontario where businesses can grow and hire more people,” said Flaherty.
“During a period of slower growth, we want to ensure Ontario businesses are not hindered by unnecessary taxes and red tape that would hamper their job-creation efforts.” n