To achieve equity among all methods of contracting and to ensure consistent ORST treatment for all custom software created through subsequent modifications, once the cumulative value of modifications has exceeded the price of the original software license, both the original software--and the modifications performed to date--should be eligible for full tax relief.
Ontario currently imposes ORST if a server is located in the Province, including cases where software is loaded onto a server in Ontario and then accessed by a remote user.
Because of the inherent complexity in these service offerings, we strongly encourage the Ministry to permit an unbundling of taxable and non-taxable services on an after-the-fact basis, subjecting only the taxable component of the supply to ORST.
RST Guide #650 presently provides excellent information on the ORST treatment of computer programs and related services.
Warrantors, such as manufacturing contractors who provide warranties on goods produced for their real property contracts, must remit ORST
at 8% on the manufactured cost of repair parts, but not on the labour to repair or re-install the fixtures or equipment.
In particular, the cost of equipment used in developing one-of-a-kind or "custom software" is generally ineligible for sales tax exemption for manufacturing equipment whereas an ORST exemption is available on the purchase of equipment used in the production of software intended for sale or distribution in a mass market.
Are Company A's expenditures for the purchase of computers or other equipment used in connection with the software development for this project eligible for an ORST manufacturing exemption?
TEI opposes adoption of the proposal to subject to ORST warranty parts and services that are not explicitly stated on an invoice.
The budget proposal would extend the ORST to insurance premiums and to an employer's self-insured employee welfare benefit programs, significantly increasing the cost of both.
the insurance company or the employer), and furthermore clarify whether the insurer and employer may, through contractual terms, shift the remittance obligation thereby permitting either party to remit the ORST on employer-paid premiums.