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28 Tax Memo 1 (1961)

handle is hein.journals/taxmmo28 and id is 1 raw text is: TAX No. 28 MEMO July, 1961 THE ONTARIO SALES TAX 2. REGULATIONS and RULINGS John F. Due, Professor of Economics, University of Illinois On June 26, the government of Ontario released the Regulations and Rulings of the retail sales tax, which becomes effective September 1. The regu- lations, which have the force of law, are made technically by the Lieutenant-Governor-in-Council, that is, they are enacted by the Cabinet, and can be changed only in the same manner; the Rulings are issued by the Comptroller of Revenue in con- formance with powers given under the Act, and may be altered by him at any time. It is impossible within the scope of this paper to review all of the regulations and rulings, but attention will be called to major ones. The province has obviously made a strong effort to develop suitable regulations and rulings. Instead of merely copying those of other provinces, which are often cumbersome and unclear, and in various respects unsatisfactory, the Ontario authorities have made a careful study, review and analysis of experience elsewhere. As a result, their regulations and rulings are for the most part clearly worded and precise, and give more specific information on many questions than those of other provinces. At the same time there are a number of innovations which should improve the operation of the tax over operations elsewhere, although some will undoubtedly be found to contain unsatisfactory features, and revision will be required. Likewise, all of the questions cannot be anticipated in advance; many specific questions will arise for which answers will be necessary. OPERATION OF THE TAX Registration As prescribed in the Act, all firms making sales at retail must register prior to September 1. They will be issued registration numbers coded by types of business and location, which will serve as a guide for mailing out monthly returns, and for making tax free purchases for resale. Registration will be necessary for any firm selling at retail (even if all sales are of exempt commodities), or making sales for resale exclusively (in fact, there are extremely few such firms). Service establishments, con- tractors, etc., not making retail sales or sales for resale are not required-and will not be permitted- to register. Apart from the usual registration permit, there are two special forms. Upon request and approval by the government, G registration permits will be issued to certain manufacturers, railroads, utilities, and similar enterprises allowing them to make all purchases tax free if they wish, and to account for tax themselves on taxable items. This will prove advantageous for most firms in the categories in which the permit will be issued. The possession of such a permit does not affect the amount of tax due, but solely the question of who actually pays it to the province. Secondly, firms not registered as vendors but making substantial purchases regularly from out- side the province of taxable goods must register as Additional copies of this Memo may be obtained at a price of 15¢. CANADIAN TAX FOUNDATION

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