10 December 1999 GST/HST Interpretation 8137/HQR0001743 - Application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to Your Operations

Dear XXXXX

Thank you for your letter of April 7, 1999, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to your operations. Please note that as of November 1, 1999, Revenue Canada became the Canada Customs and Revenue Agency. With your letter you also submitted a copy of an agreement XXXXX[.] You are enquiring whether GST must be charged on the fees and disbursements relating to this agreement.

The agreement provides that you will act as XXXXX XXXXX, you will deliver the programs and services funded by XXXXX[.] You will administer these funds according to the terms of the agreement. The fee for your service as XXXXX is subject to a maximum of XXXXX to be cost-shared equally between XXXXX and the XXXXX[.] Where a person has entered into an agreement with XXXXX, our position is that the supply of the service XXXXX XXXXX is made to the Indian band for band management activities. The effect of this position is that, as provided by Technical Information Bulletin 039R GST Administrative Policy: Application of GST to Indians (TIB039R), the supply of the service XXXXX is relieved of tax. A copy of TIB039R is enclosed.

Therefore, although the supply of your service XXXXX is a taxable supply, GST/HST will not be charged or collected in the circumstances described above. You are eligible to claim input tax credits for goods and services acquired by you for the supply of your service XXXXX[.] However, where goods and services are acquired by a XXXXX on behalf of an Indian band, the tax paid on these acquisitions will not be eligible to be claimed as input tax credits of the XXXXX[.] The tax on these acquisitions may be eligible to be claimed as input tax credits or rebates of the Indian band.

Note that the policy position described above is currently under review. We will notify you of any change to our position.

On April 1, 1997, the harmonized sales tax (HST) replaced the goods and services tax (GST) and the provincial sales tax (PST) in the three participating provinces of Nova Scotia, New Brunswick and Newfoundland with a harmonized tax rate of 15%. Where taxable supplies which are not zero-rated are provided in the harmonized provinces, tax must be collected at the harmonized rate.

Should you have require clarification on the above matter, please contact me at (613) 954-7954.

Yours truly,

S. Leclaire
Public Service Bodies and Governments Division
Excise and GST/HST Rulings Directorate
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