Collecting, Declaring and Remitting Environment Tax in PEI

Any business selling new tires (retailers)  or bringing new and used vehicles into PEI for resale (motor vehicle dealers) must be a registered vendor and charge Environment Tax on any new tires they sell in PEI.

To apply for registered vendor certification:

• Complete and submit the online form Register for and Submit Online Environment Tax Return; or
• Download, complete and submit the Application for Registration to Collect Environment Tax (PDF).

What are my responsibilities as a registered vendor?

A registered vendor must collect, report and remit, and properly record tax on any new tires they sell in PEI, in accordance with the Environment Tax Act. Any time there is a change to administrative requirements under the Act a formal Environment Tax Notice is issued to registered vendors.  Failure to comply to the requirements is an offence liable to a fine not less than $100 for each unfiled return.  A penalty rate of 5% of tax collected will be assessed against a vendor whose tax return and remittance is overdue and overdue taxes will bear interest at a rate established under the Revenue Administration Act. (PDF). 

Upon certification:

Once approved as a registered vendor, the Province will issue you a “Certificate of Registration” and a unique account number. 

• You are required to prominately display your “Certificate of Registration” at your place of business. 
• You will need your account number to remit the collected tax to the province and to be able to acquire, without payment of tax, any inventory for resale.

Collecting Environment Tax:

You are required to charge consumers the Environment Tax on new tires they purchase in PEI, including:

• Pneumatic tires for use with a motor vehicle, excluding retreaded pneumatic tires; 
• Solid rubber tires sold with an automobile or truck for use as a spare tire; and
• Tires attached to any new or used vehicle a dealer brings to PEI, including passenger, commercial, and agricultural vehicles and equipment.

Current Environment tax rates per tire:

• Rim size 17 inches or less: $4.00 
• Rim size greater than 17 inches: $11.25

The environment tax is not charged in the following situations:

• Tires previously sold and taxed at a retailer are not subject to the Environment Tax (second-hand tires). 
• A registered vendor sells tires to another vendor registered for environment tax 
• Tires purchased in PEI are shipped by the vendor to an off-Island address without consumer taking delivery of goods in PEI
• Tires are replaced under warranty at no charge to the consumer, excluding any amount paid by the consumer for cost of replacement or upgrade 
• Tires are sold to a purchaser who qualifies for Environment Tax exemption as follows:
  • Indigenous First Nations consumer (on-reserve or off-reserve)
  • Purchase using federal government issued purchase order or credit card
  • Tires certified for use on equipment to transport person with a disability, i.e. wheelchair, tree-wheeled device

Remitting Environment Tax:

You are required to file quarterly tax returns and remittance on or before the 20th day of the month for the periods ending March 31, June 30, September 30 and December 31. If you have no sales to report during a reporting period, you must submit the form marked “nil”. 

Vendors must self declare and remit environment tax on tires acquired for resale and later removed from inventory for business or personal use, including unsold vehicles taken from inventory for use as a dealership courtesy car. Report and remit tax for the quarter these goods were removed from inventory. Vehicles held in inventory, i.e. demonstrators, are not subject to environment tax until the vehicle is sold.

File quarterly returns online or in person:

• Online: Register for and Submit Online Environment Tax
• In person at any major bank or Access PEI or by mail to Department of Finance. Complete the Environment Tax Return (PDF)

Refunding Environment Tax:

Request for Refund of Environment Tax (PDF) when:

• A sale is cancelled and the full amount including the environment tax is returned to the purchaser; or
• A vendor (or consumer) pays the Environment Tax in error. 

Record Keeping:

To ensure the tax is being collected and remitted properly, the tax auditor will periodically visit registered vendors to examine records including:

1. Original records - e.g. sales invoices, purchase invoices and cash register tapes. Invoices should show the date and the environment tax charged. 
2. 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. 
3. 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). 
4. Records of goods taken from stock for the vendor's own use.

You must have written permission from the Provincial Tax Commissioner before you destroy or dispose of any records.

Do vendors receive a commission for collecting tax?

Vendors who report Environment Tax of $10,000 or less for the previous fiscal year, April 1 to March 31 are eligible for commission of 3% of tax collected, maximum $300 annually, providing they file returns by the due date.