Environment Tax Information for Vendors
This section provides important information for Environment Tax vendors including registration, tax collection, reporting and remitting requirements.
What are Environment Tax vendors?
Environment Tax vendors are businesses that sell tires to consumers and motor vehicle dealers who bring new or used motor vehicles into the Province. All Environment Tax vendors making retail sales of tires are considered to be agents of the Minister of Finance, and are required to charge, collect and remit the tax imposed under the Environment Tax Act.
Do Environment Tax vendors need to register?
All Environment Tax vendors must obtain a “Certificate of Registration” under the Environment Tax Act before selling tires to a consumer or another vendor.
No vendor shall purchase tires for resale in the province unless they have a “Certificate of Registration” issued under the Environment Tax Act for collection of Environment Tax. No vendor shall sell tires in the province at a retail sale unless they have a “Certificate of Registration” for environment tax.
How does a vendor apply for a “Certificate of Registration”?
Vendors who wish to apply for a “Certificate of Registration” must complete an Application for Registration to Collect Environment Tax form.
Upon approval, a vendor registration kit will be issued to the vendor. This kit includes a “Certificate of Registration”. This certificate must be displayed prominently in the place of business.
Does a “Certificate of Registration” ever expire or become invalid?
A “Certificate of Registration” becomes invalid and must be returned to the Department of Finance, Taxation and Property Records for update or destruction when:
- the name of the business changes;
- the address of the business changes;
- the business no longer retails tires;
- the form of business (partnership, corporation or proprietorship) changes; or
- the business closes permanently.
Is there other important information provided to vendors in the vendor registration kit?
In addition to the “Certificate of Registration”, the vendor registration kit also includes a letter providing the vendor’s account number and information on reporting periods for remitting Environment Tax.
What is a vendor account number?
Every vendor registered to collect Environment Tax is assigned a unique account number. The vendor account number consists of six digits.
Why is having an account number important to a vendor?
The vendor account number is important as it grants the vendor authority to purchase tires for re-sale in the ordinary course of business without paying environment tax on the purchase.
The vendor account number must be quoted when purchasing tires for resale.
In what circumstances are vendors not allowed to use their account number to purchase tires?
If a vendor is purchasing tires for their own use or consumption, the vendor account number must not be used and the vendor must pay the tax to the supplier at the time of the purchase.
If the supplier is not registered in Prince Edward Island to collect the tax, then the vendor purchasing the tires for their own use, must remit the tax on the environment tax return form for the month of purchase.
Holders of a “Certificate of Registration” who utilize their account numbers to purchase, exempt of tax, tires on which tax should be paid, commit an offence and are liable to penalties as provided under the Revenue Administration Act.
What are the vendor obligations in the collection of Environment Tax?
Vendors who sell tires act as agents of the Minister of Finance and must collect the tax on their sales at the rate as specified in the section Environment Tax – Rates.
Environment Tax is charged on new tires purchased or consumed in Prince Edward Island. Environment Tax is also charged on tires attached to or included with a new or used motor vehicle purchased outside the Province and brought into Prince Edward Island.
Tire is defined as:
- a pneumatic tire for use with a motor vehicle, and
- a solid rubber tire sold with an automobile or truck for use as a spare tire,
but does not include a retreaded pneumatic tire.
Motor vehicle is defined as a passenger car, automobile, motorcycle, truck, bus, truck tractor, tractor trailer or similar mobile equipment designed and used for the transportation of passengers or goods including construction equipment and tractors, combines or other agricultural implements.
A tire is considered to be new until after its first purchase at a retail sale in the Province of Prince Edward Island. Tires previously sold at retail in Prince Edward Island are not subject to Environment Tax.
For greater clarity, a motor vehicle dealer who brings new or used motor vehicles into the Province is required to charge, collect and remit the tax on the tires includes with the motor vehicle brought into the Province.
When is the tax due?
Environment tax is due from the purchaser at the time the sale is made regardless of the method of payment (i.e. cash, charge, lay-away, installment, etc.).
Environment tax is due from the vendors (collectors) quarterly. For more detailed information see section below How do Environment Tax vendors report and remit the tax?
The terms of payment have no bearing on the collection and remittance of the tax.
Do registered Environment Tax vendors receive a commission for acting as agents for the Minister of Finance in the collection of the tax?
For collecting and remitting the tax, vendors who reported Environment Tax of $10,000 or less for the prior fiscal year of the Province (from April 1 to March 31) are eligible for a commission of 3% of the tax collected during the current fiscal year of the Province, to an annual maximum of $300.
How do Environment Tax vendors report and remit the tax?
Vendors are required to file tax returns and remit the tax on a quarterly basis for the periods ending March 31, June 30, September 30 and December 31. Quarterly tax returns and tax remittances must be received on or before the 20th day of the month following the end of the quarter.
For the convenience of vendors, quarterly returns may be filed on-line or through any major bank. In addition, tax returns, using the Environment Tax Return form, may be filed and tax remittances made in-person at any Access PEI Centre or by mail addressed to:
Department of Finance
Taxation and Property Records
PO Box 1330
What if a vendor has no sales during a reporting period?
If a vendor has no sales of tires during a reporting period, the vendor is required to file a return marked “nil” for that period.
What happens if a vendor fails to file an Environment Tax return or remit the tax?
Where a vendor fails
- to file a return;
- to collect tax as required under the Environment Tax Act;
- to substantiate his return with records.
The Department of Finance, Taxation and Property Records may make an estimate of
- the amount of tax collected;
- the tax which should have been collected;
The estimated amount is due and payable immediately.
Vendors who fail to file a return as and when required are guilty of an offence and on summary conviction are liable to a fine of not less than $100 in respect of each unfiled return.
Is there a penalty if a vendor fails to file an Environment Tax return or remit the tax on time?
A penalty at the rate of 5% of the tax collected will be assessed against any vendor whose tax return and remittance of tax is overdue.
Any overdue tax will bear interest at a rate established in the regulations under the Revenue Administration Act.
Any otherwise eligible commission will be disallowed where the environment tax return form is not filed by the due date.
Can a business or an individual request a refund of Environment Tax if the tax was collected and remitted by a vendor in error?
A business or individual who has paid Environment Tax in error can apply for a refund using the Request for Refund of Environment Tax form.
Do Environment Tax vendors have to keep records?
All vendors may be visited periodically by a Tax Auditor. The purpose of such a visit is to ensure that the tax is being collected and remitted properly. The records required for examination are:
- Original records - e.g. sales invoices, purchase invoices and cash register tapes. Invoices should show the date and the environment tax charged.
- Details of exempt sales - e.g. details of sales made to vendors for resale. Vendor account numbers must be recorded and retained by the vendor on all tax exempt sales.
- Tax collected - e.g. tax records, vendor's copy of the environment tax return forms, records of payments, disposal of tax, and commission taken (if applicable).
- Records of goods taken from stock for the vendor's own use.
Can Environment Tax vendors destroy and dispose of records?
Vendors must obtain the written permission of the Provincial Tax Commissioner before any records can be destroyed or disposed of.
Are there any common situations where the application of Environment Tax can be confusing?
The following are some examples of the application of Environment Tax in specific situations:
- Sale to another vendor
A vendor is permitted to sell, Environment Tax exempt, tires to another vendor who is the holder of a “Certificate of Registration” for environment tax.
- Goods taken from stock
Where a vendor takes tires from inventory for the vendor’s own use, the Environment Tax is due. Tax must be reported and remitted on the environment tax return for the quarter in which the tires are removed from inventory for own use.
- Cancelled sales
Where a sale is cancelled, and the full amount of the purchase price is returned to the purchaser, the vendor must also refund the Environment Tax.
- Delivery of goods
Where a vendor sells tires and ships the tires for delivery outside the province, the Environment Tax does not apply to such sales. However, proof of delivery outside the province must be retained by the vendor to justify non-collection of tax.
Where a delivery of tires is taken in the province, the tax must be collected regardless of whether or not the purchaser claims to be a non-resident.
- Sales to First Nation Individuals
Please refer to the section Environment Tax Exemptions – What Environment Tax exemptions should vendors be aware of?
- Sales to Federal government departments
Federal government departments and their agencies may purchase tires exempt of Environment Tax if the goods are purchased on a federal government purchase order or with a federal government credit card.
Purchases by cash or by the use of a personal credit card by federal employees are not tax exempt and the vendor must charge environment tax to the purchaser.
Are there situations where the sale of new tires would be exempt from Environment Tax?
Please refer to section Environment Tax Exemptions for an overview of common situations where the sale of new tires would be exempt from Environment Tax.
How are vendors informed of legislative interpretations or changes to administrative requirements under the Environment Tax Act?
A formal Environment Tax Notice – General is produced and posted on our website each time there are legislative interpretations or changes to administrative requirements under the Environment Tax Act to be communicated. Information for Vendors is summarized in the Environment Tax Notice – General, ETN:103, General Instructions for Vendors.