CRA rules that on-charges made to an Ontario tire seller’s customers for waste diversion fees imposed on it by Ontario Tire Stewardship are subject to HST

A company (“ACo”) which imports tires into Ontario is required to pay a per-tire “stewardship fee” to Ontario Tire Stewardship (“OTS”) to help cover the costs of the used tire recycling program carried on by OTS. ACo then adds a separately-identified “OTS charge” on its invoices for its tire sales in order to recoup those OTS fees.

In 144133, CRA had ruled that the “fees” charged by OTS were not subject to HST because OTS was not supplying anything to the companies required to pay them. CRA has now ruled that the charges made by ACo to its customers to recoup the OTS fees paid by it are part of the consideration for its sales to them, so that those charges are subject to HST.

This is broadly analogous to HST in effect being imposed on municipal taxes when the tenant pays such taxes, viewed as a form of additional rent (see 156633 and 38588).

Neal Armstrong. Summary of 18 September 2015 Ruling 168521r under ETA s. 123(1) - consideration.