In some circumstances not-for-profit organizations can receive a refund of Ontario PST paid on capital investments. To qualify for a refund your organization must have:

• applied for a Revenue Canada charitable registration number before the work started
• received the number before you apply for the refund.

Organizations without a charitable registration number do not qualify.

What qualifies for PST refunds

Capital investments deemed "real property" qualify for PST refunds. According to Retail Sales Tax Guide No. 806, real property "means land and any item permanently attached to land, such as buildings, roads, fences, etc. Capital investment also includes fixtures, such as counters, cabinets, etc., that are considered to be permanently attached to real property when installed."

There is a wrinkle. Your organization must own the land/building or have a lease for a period of 20 years or more (including renewal terms) on which there is at least 10 years remaining at the time materials for the improvements are purchased.

Constructing a new building on owned land and renovations to owned buildings are the two most common types of expenditures qualifying for Ontario PST refunds.

Applying for a refund

To request a refund of Ontario PST you should complete a "General Application for Refund of Retail Sales Tax" form available at any Retail Sales Tax office. The form must be signed by a representative of the Board of Directors and be accompanied by written statement that all refunded sales tax will be used for charitable purposes.

The refund application must include summaries showing the calculation of retail sales tax to be refunded. These summaries should include retail sales tax on an invoice-by-invoice basis, copies of invoices and cancelled cheques.

Suppliers' invoices submitted should include the following information:

• retail sales tax paid
• invoice date and number
• date the invoice was paid
• name of the supplier
• description and use of items claimed.

Refunds on materials and labour for construction contracts

Organizations entering into a written construction contract with a contractor for labour and materials may not know the exact amount of retail sales tax paid by the contractor. In such a case the refund is based on a percentage of the total contract price and architects' fees based on a formula - 3.4% of total costs excluding GST. Contract costs must exclude several PST exempt expense categories including:

• building permit fees
• equipment and rental charges
• land improvement costs
• demolition costs.

You must submit copies of the contractors' invoices and cancelled cheques showing proof of payment with the return. Refer to Retail Sales Tax Guide No. 806 for full details.

Refund time limit

The refund application must be received by the Ontario Ministry of Finance within four years of payment of Ontario PST where materials have been purchased by the organization. If work was done by a contractor then the refund application is due within four years of the last payment by the organization on the contract.