Cash rebates associated with the 8% Ontario Retail Sales Tax (RST) no longer apply after the province replaces the RST with the Harmonized Sales Tax (HST).
The federally administered HST becomes effective on July 1, 2010.
Ontario’s Alternative Fuel RST Rebate Program is a notable cancelation as result of the newly launched HST.
The old tax rebate program was fairly successful. Since 2006, over $24 million in tax rebates was provided to buyers of 14,000 qualifying vehicles.
Maximum Cash Rebate Amounts under Old Program
Depending on vehicle type, the 8% retail sales tax rebate was subject to maximum amounts.
For alternative fuel vehicles, there was a maximum of $750 for propane vehicles or $1,000 for vehicles powered by other alternative fuels including electricity.
Buyers of alternative fuel buses could apply for a full rebate of RST payments.
For hybrid electric vehicles, there was a maximum of $1,000 if bought and delivered from May 10, 2001 to March 23, 2006 or $2,000 if bought and delivered from March 24, 2006 to March 31, 2012.
An RST rebate may be obtained on the purchase price of vehicles, conversion kits and installation labour if the conversion occurs within 180 days of the vehicle’s date of purchase.
Otherwise, only the RST paid on the conversion kit and installation labour charges would be refunded.
Alternative Fuel Vehicles Eligible for Cash Rebates
Examples of alternative fuels include electrical energy, ethanol, methanol, natural gas, propane or other manufactured gas.
Cash rebates of retail sales tax were paid to consumers who either bought or leased vehicles that run exclusively on alternative fuels, or dual-powered vehicles that can run on alternative fuels or exclusively on gasoline or diesel.
Alternative vehicles are cars, buses, trucks and vans licensed under the Highway Traffic Act.
Excluded are vehicles that run on an alternative fuel mixed with gasoline, like E85 (85% ethanol and 15% gasoline).
Hybrid Electric Vehicles Eligible for Cash Rebates
The old alternative fuel program also provided tax refunds when consumers bought or leased a new or used hybrid electric vehicle.
However, that hybrid electric vehicle must have been made to operate with all three of the components below:
- Power from an electric motor and an internal combustion engine,
- Regenerative braking designed to recover the energy released while slowing down or stopping, and
- Battery, ultra capacitor, flywheel or a similar energy storage system.
Old RST Rebate Compared to New HST Cash Back Program
The new HST cash back program effective July 1, 2010 has a maximum of $8,500 – much higher than the caps for different types of alternative vehicles under the old RST plan (excluding alternative fuel buses).
Then again, the scope of the replacement cash back program excludes used vehicles, and is restricted to vehicles that run on electric power.
Also, the July 1, 2010 plan will have a quota that limits HTS cash rebates to the first 10,000 persons, businesses or organizations that buy or lease a new electric vehicle.
The old RST plan had no quota.
Finally, the wording of the old RST Rebate Program seemed to focus more on leases and purchases that individual consumers made rather than on transaction with persons, businesses or organizations.
Sources: Ontario Ministry of Revenue website Vehicles Powered by Alternative Fuels.
Daniel Workman - A senior business and finance writer who also does French translations, notably international trade and insurance materials.
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