For the benefit of our customers, Team Equipment Company has taken on the responsibility of the 6% use tax on all rentals. This means you will never be charged an additional 6% from us!

 

Lessor Election to Pay Use Tax on Rental Receipts

 

A lessor may elect to pay use tax on rental receipts. If the lessor makes that election, the property is exempt from sales tax and use tax at the time the property is acquired.9 If the lessor does not make the election, the property is taxed at acquisition, but rental receipts are exempt from use tax. 

​

Exempt Transactions

 

If the lessee of the property is an entity that is exempt from tax under the Use Tax Act or the property itself is exempt from use tax then the lessor is not liable for use tax on the rental receipts. The lessor must obtain from the lessee a proper exemption claim or the required identifying information.

 

Subleasing 

 

If a lessor leases tangible personal property to a lessee, and sales or use tax was paid upon the lessor’s acquisition of the property, any subleasing of the property by the lessee (sublessor) is not subject to tax. In a leaseback arrangement where the sublessor leases the property back to the original lessor, use tax will be owed by the sublessor if the original lessor did not pay sales or use tax on the property when it first purchased the property or if the original lessor did not pay use tax on the property under a lessor election.

 

For full legal text please click on the link below.