Steward/Remitter-Obligation Scenarios FAQs
Determining which Company is the Obligated Steward
When does the Brand Owner become the obligated Steward vs. when does the First Importer become the obligated Steward for a particular EEE product?
A Brand Owner company is designated as a Steward with respect to a particular product that is designated as EEE if it is the Brand Owner during the data period AND to which it has a commercial connection. If the Brand Owner does not meet both criteria of the Rules then the designation of Steward falls upon the First Importer into Ontario for that particular product.
Below is the Designation of Stewards under the Rules followed by several scenarios to further explain the situation.
The Rules state:
2) Designation of Stewards
For the purposes of determining which Person shall be designated as a Steward for a particular class or group of EEE, the following provisions shall apply, in the order in which they are set out. If two or more Persons are designated as a Steward pursuant to the following, the earlier provision shall prevail.(1) A Brand Owner is designated as a Steward with respect to all EEE:
a. for which it is the Brand Owner in the Data Period; and
b. to which it has a Commercial Connection;(2) A First Importer is designated as a Steward with respect to all EEE for which it is the First Importer in the Data Period.
(3) A Franchisor is designated as a Steward with respect to all EEE which are Supplied within the relevant Franchise System in the Data Period.
(4) If there are two Brand Owners for the same EEE in the same Data Period, the Brand Owner more directly connected to the production of the EEE shall be designated as the Steward.
(5) If there is Unbranded EEE in the Data Period, and if the Manufacturer is Resident in Ontario, the Manufacturer of such EEE shall be designated as the Steward for such EEE; otherwise the First Importer shall be designated as the Steward for such EEE.
Note: Commercial connection for the purposes of the Steward Rules means that a person derives a direct economic benefit when a particular EEE product is supplied in Ontario.
Scenario 1:
A resident-in-Ontario Brand Owner (Company A) ships an EEE product to an out-of-province company (Company B – third party company) who in turn redistributes the product and supplies it to an Ontario company (Company C). Who is the obligated Steward, the resident-in-Ontario Brand Owner (Company A), the out-of-province company (Company B) or the resident-in-Ontario company (Company C) that receives the product for supply in Ontario?
Company C is considered the First Importer resident in Ontario (and is the obligated Steward). This is because the resident-in-Ontario Brand Owner (Company A) fails to meet the second component of the designation of a Steward under the Rules which states that the Brand Owner must have a commercial connection to the EEE product. So, although the Brand Owner meets the first subsection of the Rules, i.e., the company is the Brand Owner during the data period, it fails to meet the second clause of determining obligation as it does not have a commercial connection to the EEE product when the product returns to be supplied into Ontario.
Scenario 2:
A resident-in-Ontario Brand Owner (Company A) ships an EEE product to an out-of-province location that it owns (i.e., this is not a third-party company) and then redistributes the product back into Ontario supplying it to another company that it does not own (Company B). Who is the obligated Steward, the resident-in-Ontario Brand Owner (Company A) or Company B (the company that Company A supplied the product to)?
The Brand Owner resident in Ontario (Company A) is the obligated Steward. This is because the resident-in-Ontario Brand Owner meets both subsections of the Rules – it is the Brand Owner in the data period and it meets the commercial connection criteria.
Scenario 3:
A Brand Owner, non-resident-in-Ontario (Company A) ships an EEE product to a distributor who is resident in Ontario (Company B). Who is the obligated Steward, the non-resident-in-Ontario Brand Owner (Company A) or Company B (the company that Company A supplied the product to)?
The First Importer resident in Ontario (Company B) is the obligated Steward. This is because company A is not resident in Ontario.
Who is the obligated Steward when a branded EEE product (with the Brand Owner being resident in Ontario), is sold into Ontario by a related company (Brand Owner US Inc.)?
The Brand Owner for the brand on the product is Brand Owner Company Canada Inc, however, it is the U.S. affiliate Brand Owner (Brand Owner Company US Inc.) that sells and ships directly to a distributor resident in Ontario.
In this case, the distributor is the First Importer resident in Ontario and is therefore the obligated party, i.e., it is not the Brand Owner who is obligated. This is because the resident-in-Ontario Brand Owner fails to meet the commercial connection criteria as outlined by the Rules.
2) Who is the obligated Steward when a branded EEE product (with the Brand Owner being resident in Ontario), is sold into Ontario via a third party company?
The following scenario explains a situation.
Scenario:
The Brand Owner for the brand on the product is Brand Owner Company Canada Inc, however, the seller is an affiliated Brand Owner located in the US who sells and ships directly to a distributor resident in Ontario.
That distributor as the First Importer Resident in Ontario is the obligated party and not the Brand Owner. This is because the Resident in Ontario Brand Owner fails to meet the commercial connection criteria as outlined by the Rules.
3) How does freight on board (FOB Shipping or FOB Destination) affect the designation of Steward?
Freight on board (FOB Shipping) does not come into play as it only matters which company is resident in Ontario. The following scenario explains a situation.
Scenario:
Does it depend on whether our company’s terms of purchase with the vendor/supplier is freight on board vendor shipping point (FOB Shipping)(i.e., title of products passes from the seller/vendor to our company at the seller/vendor’s warehouse) or freight on board (FOB Destination) customer receiving point?
The answer is not dependent on the terms of purchase but rather which company is resident in Ontario. If the shipper is resident in Ontario then the shipper is the obligated Steward as the First Importer and therefore the Steward who remits a Steward’s Report for the EEE product supplied into Ontario. If the shipper is not resident in Ontario than the receiving company (as long as it is Resident in Ontario) becomes the First Importer and is the Steward who remits a Steward’s Report for the EEE product supplied into Ontario
Determining when an EEE product is obligated
1) When an EEE product is manufactured in Ontario but shipped outside the province for sale, is it obligated under the WEEE program?
Although the EEE product is manufactured in Ontario, it is sold for use outside the province of Ontario and therefore not obligated.
2) Can you please clarify who is the obligated Steward when a branded EEE product (with the Brand Owner being resident in Ontario), is sold into Ontario via a third party company?
The following scenario explains a situation.
Scenario:
The Brand Owner for the brand on the product is Brand Owner Company Canada Inc, however, the seller is an affiliated Brand Owner located in the US who sells and ships directly to a distributor resident in Ontario.
That distributor as the First Importer Resident in Ontario is the obligated party and not the Brand Owner. This is because the Resident in Ontario Brand Owner fails to meet the commercial connection criteria as outlined by the Rules.
3) When an EEE product is being shipped in and out of Ontario, how is it determined whether or not the product is obligated and which company in the transaction is obligated Steward.
The following scenarios explain the different situations.
Scenario 1:
If the EEE product (for which the Brand Owner is not resident in Ontario) is shipped to a resident-in-Ontario company and to its Ontario location, then subsequently the EEE product is redistributed outside of Ontario, the EEE product is deemed not obligated because it was not supplied for use in Ontario.
However, if this EEE product is re-distributed back into Ontario for use in Ontario, then it is obligated. In this case, the obligated Steward is the resident-in-Ontario First Importer of that product (this the company that received the EEE product back into Ontario. Please note that this is not the original first company to take possession in Ontario (the company that distributed it outside the province in the first transaction).
Scenario 2:
If an EEE product (for which the Brand Owner is resident in Ontario – Company A) is shipped to a resident-in-Ontario company and to its Ontario location (Company B). The EEE product is obligated because it was supplied for use in Ontario by the Brand Owner (Company A). The obligated Steward is the Brand Owner resident in Ontario of that product (Company A).
If this EEE product is subsequently distributed outside Ontario then it is not obligated. In this case, the Brand Owner (Company A) could deduct the fees paid on the EEE product if it can satisfy OES that the EEE product was subsequently exported outside of Ontario by the third party company.
Should this EEE product be shipped back into Ontario for use in Ontario, then the company to import the EEE product (the company must be resident in Ontario) is the obligated steward for that EEE product.
Determining timelines/data periods for remitting fees to OES
When is a Steward or Remitter required to remit EEE fees to OES?
Stewards and Remitters are required to submit monthly Steward’s Reports/ Remitter’s Reports for the total quantity of obligated EEE products supplied for use in Ontario in the corresponding data period. The EEE fees are to be remitted by the Steward/Remitter for the EEE products supplied for use in Ontario in a given data period, by the end of the following month, i.e. EEE products supplied between April 1-April 30th, 2010 data period will be included in a Steward’s Report/Remitter’s Report filed between May 1-May 31, 2010. EEE fees will be due to OES by May 31, 2010. Please refer to Guidebook 1 for details.
The scenario below illustrates show this fits into the distribution chain of events.
Scenario:
Company A, a resident-in-Ontario First Importer receives EEE products shipped to their Ontario location from their supplier (Company B) – a Brand Owner but not resident in Ontario in April 2010. In June, Company A re-sells the EEE products to an end customer. When must Company A, as resident-in-Ontario First Importer, file a Steward’s Report?
If Company A (resident-in-Ontario First Importer) receives the EEE product from supplier ( Company B) in April 2010 but does not re-sell the product until June 2010, the EEE fee would be captured and remitted in the June 2010 obligation month. The Steward’s Report and payment for EEE products supplied to Ontario in June 2010 is due to OES by July 31, 2010.
Drop Shipments
What is the Steward obligation in the case of drop shipments?
The following three scenarios illustrate some examples of drop shipment as they relate to Steward obligations.
Scenario 1:
A Brand Owner not resident in Ontario conducts a drop shipment to your customer in Ontario, and the Brand Owner not resident in Ontario invoices your company (resident in Ontario) and your company then invoices its customer. In this case, your company is the First Importer and therefore the Steward.
Scenario 2:
A Brand Owner not resident in Ontario conducts a drop shipment to your customer in Ontario, and invoices your customer directly. Your customer, in turn, pays your company a broker fee or commission. In this case, your customer becomes the First Importer and therefore the Steward.
Scenario 3:
A Brand Owner not resident in Ontario conducts a drop shipment to your customer in Ontario and your company receives a broker fee/commission from the Brand Owner and directly sends your customer an invoice. In this case, your customer is the First Importer and therefore the Steward.
EEE Product Returns
1) Are EEE products returned to Brand Owners outside of Ontario eligible as a deduction under the OES program?
If the product incurred an OES EEE fee that was included in a prior month’s EEE Steward’s Report (or Remitter’s Report) then a deduction can be made by your company for that product providing that your company can track and substantiate the removed EEE product.
2) Are EEE products returned to resident-in-Ontario Brand Owners eligible as a deduction under the OES program?
If the EEE product incurred an OES EEE fee that was previously included in your company’s EEE Steward’s Report then a deduction can be made for such EEE product. In this case, unless a Remitter’s Agreement has been entered with the vendor and your organization there are a few cases where your organization would be including this EEE product in your EEE Steward’s Report.
3) Are EEE products returned from other provincial programs to an OES Steward’s location eligible for a deduction under the OES program?
If a company pays an EEE fee in another province, it does not exempt the same EEE from an Ontario EEE fee if that product is supplied for use in Ontario. The company must discuss with the other provincial program if a deduction is available for the product under that province’s program.
The reverse is applicable, if there is a fee assessed by Ontario on an EEE product that is returned and is not ultimately supplied for use in Ontario, OES will allow a deduction on the obligated Steward’s Report/Remitter’s Report with proper documentation.
