Please note that the following document, although correct at the time of issue, may not represent the current position of the Canada Revenue Agency. / Veuillez prendre note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'Agence du revenu du Canada.
GST/HST Rulings Directorate
Place de Ville, Tower A, 5th floor
320 Queen Street
Ottawa ON K1A 0L5
[Addressee]
Case Number: 203496
Business Number: […]
Dear [Client]:
Subject: GST/HST INTERPRETATION
Application of the GST/HST to […][vendors] Located on Reserves
Thank you for your correspondence of [mm/dd/yyyy], concerning the application of the goods and services tax/harmonized sales tax (GST/HST) to the sale of […][products] by […](the Corporation) to […][vendors] located on a reserve. We apologize for the delay in this response.
The Canada Revenue Agency (CRA) recognizes that many Indigenous people in Canada prefer not to be described as Indians. However, the term Indian is used in this letter because it has a legal meaning in the Indian Act (Footnote 1) .
The HST applies in the participating provinces at the following rates: 13% in Ontario; and 15% in New Brunswick, Newfoundland and Labrador, Nova Scotia, and Prince Edward Island. The GST applies in the rest of Canada at the rate of 5%.
All legislative references are to the Excise Tax Act (ETA) unless otherwise specified.
We understand
1. The Corporation is a […] and is operating as […].
2.The Corporation […] sells [products] to […][vendors in the Province].
3.[…]
4.All orders from [vendors] are submitted directly to the Corporation either electronically or by telephone. All orders are shipped by the Corporation to [vendors] in the Province from its warehouse in the Province.
INTERPRETATION REQUESTED
You would like to know
1. whether all supplies of the Corporation’s products may be relieved from the GST/HST from the date that the Corporation receives the Certificate of Indian status (status card) or Temporary Confirmation of Registration Document (TCRD) from the sole proprietor or partner of a partnership.
2. whether the Corporation should consult the website of Indigenous Services Canada (ISC), which contains an exhaustive list of First Nations officials, to confirm that the certificate provided by an Indian band or a band-empowered entity (BEE) has been signed by an authorized official.
3. whether all supplies of the Corporation’s [...] products to an Indian band or a BEE may be relieved from the GST/HST from the date that the Corporation receives the Indian band’s or BEE’s certificate.
4. whether corporations do not qualify for GST/HST relief unless they are an incorporated BEE acquiring property for band management activities (BMAs).
5. whether trusts do not qualify for GST/HST relief.
6. under what conditions, if any, would the supply of the Corporation’s […] products to a joint venture qualify for GST/HST relief.
7. whether GST/HST Notice 238- First Nations with a Self-Government Agreement Ending Indian Act Tax Relief - Determining Tax Relief for Indian Members (GST/HST Notice 238) is exhaustive for the purposes of confirming whether a First Nation has signed a self-government or final agreement and whether this publication is regularly updated when additional First Nations sign such agreements.
8. whether a bill of lading, weigh bill or other standard delivery document produced by the Corporation, or an agent delivering product on behalf of the Corporation, would be sufficient documentary evidence of delivery to a reserve.
9. what ongoing monitoring or additional records the Corporation is required to conduct or collect to continue the application of any relief from the GST/HST on its supply of […] products to purchasers who qualify for such relief.
10. whether there are any additional scenarios not contemplated above that could affect the Corporation doing business with First Nations from a GST/HST perspective.
INTERPRETATION GIVEN
GST/HST Technical Information Bulletin B-039, GST/HST Administrative Policy – Application of the GST/HST to Indians (B-039) summarizes CRA’s policy concerning the treatment of supplies made to, or by, Indians, Indian bands and BEEs.
1. GST/HST relief for an Indian sole proprietor or partner
From the date that the Corporation receives the status card or TCRD from a purchaser who is a sole-proprietor or a partner of a partnership, supplies of the Corporation’s […] products to such a purchaser would be relieved from the GST/HST provided that the […] products are delivered to a reserve by the Corporation or an agent of the Corporation.
2. Confirmation of an Indian band and a BEE’s authorized officer
When an Indian band is the purchaser of the […] products, an authorized officer for the purposes of signing the certificate generally includes the chief and council members of the Indian band. The ISC website maintains a database of “First Nation Profiles”, which includes a list of all Indian bands located in Canada along with the names of the chiefs and council members. This information can be accessed using the following link: https://fnp-ppn.aadnc-aandc.gc.ca/fnp/Main/index.aspx?lang=eng.
The contact information for an Indian band, as outlined in the “First Nations Profiles” may be used to confirm authorized officials. If the individual that signed the certificate does not appear as chief or council member in the “First Nations Profiles”, the Corporation may contact the band to confirm if the individual is an authorized officer.
When the purchaser is a BEE, an authorized officer would be an individual who is duly authorized by the governing body of the BEE to sign documents on its behalf. If the BEE is a corporation, an association or organization that has duly elected or appointed officers, then the president, vice-president, secretary, treasurer or other equivalent officer is considered to be authorized. The Corporation may contact the BEE to confirm that the individual that signed the certificate is an authorized officer.
3. Tax relief from the date the Corporation receives an Indian band or BEE’s Certificate
From the date that the Corporation receives the certificate from an Indian band or a BEE, supplies of the Corporation’s […] products to the Indian band or BEE may be relieved from the GST/HST provided that the products are delivered to a reserve by the Corporation or an agent of the Corporation.
When the purchaser is an incorporated BEE, in order for relief from the GST/HST to apply, the certificate must also include a statement that the product is being purchased for band management activities (BMA).
4. Tax relief for incorporated BEEs
When making off reserve purchases of property, such as […] products, an incorporated BEE must be purchasing the property for BMAs in order for relief from the GST/HST to apply. An incorporated BEE must show its certificate to the Corporation which certifies that it is acquiring the property for BMAs. In addition, the property must be delivered to a reserve by the Corporation or the Corporation’s agent.
BMAs are those activities that relate to the normal administration, programs, and services that are designed and/or delivered for the benefit, well-being, or assistance of band members that are not commercial activities for which the entity would otherwise be entitled to input tax credits (ITCs). The sale of […] products by an incorporated BEE would generally be a “commercial activity” as the term is defined under subsection 123(1). As a result, when […] products are purchased by an incorporated BEE, the BEE would generally not be purchasing the products for BMAs.
5. The CRA’s policy position concerning First Nations’ trusts
The CRA takes the following position concerning First Nations’ trusts. At common law, a trust is a legal relationship as opposed to a legal entity. A trust does not have shareholders or members. Therefore, a trust cannot qualify as a BEE as it does not meet the “owned” or “controlled” criteria of the definition outlined in B-039.
In addition, for GST/HST purposes, a trust is defined as a person under subsection 123(1). As such, a trust is considered a separate person from its trustees and beneficiaries. Therefore, a trust cannot be an Indian or an Indian band even though all the trustees and beneficiaries may be Indians or Indian bands. Accordingly, a trust is not entitled to the GST/HST relief described in B-039.
6. Eligibility of joint ventures for the GST/HST relief described in B-039
The definition of “person” under subsection 123(1) does not include a joint venture. Therefore, it is not possible for a joint venture to be the “recipient” of a supply as that term is defined under subsection 123(1). As a result, one or more of the participants of the joint venture would be the recipient of a supply that is purchased for the joint venture activity. The recipient of a supply would be deemed to be the “operator” when the operator and the co-venturer jointly make an election under subsection 273(1). An election under subsection 273(1) can only be made when the activity of the joint venture is one that involves the exploration or exploitation of mineral deposits or an activity prescribed in the Joint Venture (GST/HST) Regulations.
Since the acquisition and retail sale of […] products by a joint venture is not for the exploration or exploitation of mineral deposits nor is it an activity that is prescribed in the Joint Venture (GST/HST) Regulations, an election under section 273 is not available.
Relief from the GST/HST to a participant of a joint venture
Given that it is not possible for a joint venture to be the recipient of a supply, a joint venture is not eligible for relief from the GST/HST described in B-039. However, when the Corporation sells […] products to a participant of a joint venture who is the recipient of the supply and that participant is also an Indian, Indian band or BEE, the supply would be relieved from the GST/HST provided that the requirements described in B-039 are met.
7. First Nations with a Self-Government or Final Agreement ending the tax exemption provided under the Indian Act
GST/HST Notice 238 is normally exhaustive to confirm whether a First Nation has signed a self-government or final agreement that includes a provision to end the tax exemption provided under section 87 the Indian Act. Such a provision effectively ends entitlement to the GST/HST relief described in B-039 for certain members or citizens of those First Nations. GST/HST Notice 238 is updated when a First Nation enters into a self-government or final agreement that includes a provision to end the tax exemption provided under section 87 of the Indian Act.
8. Sufficient documentary evidence of delivery to a reserve
Delivery by the Corporation
When […] products are delivered to a reserve directly by the Corporation, it must maintain acceptable evidence that delivery was made to a reserve. The Corporation must indicate the place of delivery on the invoice or other sales document. Acceptable evidence includes the driver’s log information, expense reports (for example, fuel purchases, mileage logs or dispatch records) and disbursement records relating to the delivery. Acceptable evidence also includes the signature of an Indian purchaser, or the signature of an authorized officer when a purchaser is an Indian band or a BEE, that attests that the […] products were received on a reserve. Such evidence must be maintained in the Corporation’s books and records in addition to the proof of the purchaser’s Indian status (for example, a notation on the invoice of the individual’s registry number as shown on their status card) or an Indian bands or a BEE’s certificate.
Delivery by the Corporation’s agent
When the […] products are delivered by an agent of the Corporation to a reserve, the Corporation must maintain both of the following:
- proof of the purchaser’s Indian status (see above for an example) or the certificate of the Indian band or BEE
- proof of delivery being made to the reserve (for example, a waybill or postal receipt that clearly shows an address on a reserve)
An agent includes an individual or company under contract for making deliveries (for example, postal services, trains, boats or couriers). A carrier who is under contract with the purchaser is not considered an agent of the Corporation. In addition, undertakings by the purchasers to deliver the […] products to themselves as agents of the Corporation are not acceptable to the CRA.
9. Ongoing monitoring or additional records
The ongoing records that the Corporation is required to keep to demonstrate that a supply is relieved from the GST/HST are outlined in B-039 and have been previously addressed above (see Interpretations 3 and 8).
Sales over the telephone, internet and other electronic means
Since Indians, Indian bands and BEEs cannot show appropriate documents in person when they make a purchase over the telephone or electronically, the CRA has taken the position that photocopies and electronic versions of the appropriate documents are acceptable to support their eligibility for GST/HST relief. For example, a purchaser may provide a photocopy of their status card (for Indians) or a certificate (for Indian bands and BEEs) by mail or electronically to the vendor. For more information, refer to GST/HST Info Sheet GI-127, Documentary Evidence when Making Tax-Relieved Sales to Indians and Indian Bands over the Telephone, Internet or Other Electronic Means.
10. Additional Scenarios
An interpretation sets out the CRA’s view of how relevant legislation applies to a generic fact situation. An interpretation may also set out the CRA’s general understanding of particular provisions of the legislation. An interpretation request should provide sufficient information to enable the CRA to understand the issues to be considered. Therefore, we cannot comment on any additional scenarios not contemplated in your submission that could impact the Corporation’s business with First Nations from a tax perspective. You may refer to GST/HST Memorandum 1-4, Excise and GST/HST Rulings and Interpretations Service for more information.
The Corporation may be eligible to claim ITCs for any GST/HST paid or payable on purchases made to supply taxable […] products to Indians, Indian bands and BEEs even though the Corporation may not have collected the GST/HST on the supply. In contrast, there is generally no ITC entitlement for any GST/HST paid or payable on purchases made to provide exempt supplies to customers. Exempt supplies are listed in Schedule V to the ETA.
DISCLAIMER
In accordance with the qualifications and guidelines set out in GST/HST Memorandum 1-4, Excise and GST/HST Rulings and Interpretations Service, the interpretations given in this letter, including any additional information, is not a ruling and does not bind the CRA with respect to a particular situation. Future changes to the ETA, regulations, or the CRA’s interpretative policy could affect the interpretations or the additional information provided herein.
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 343-573-6095. If you have a specific question on joint ventures, you may contact Hélène Lacasse, Manager Financial Services Unit, Financial Institutions and Real Property Division, GST/HST Rulings Directorate, at 343-571-0207. Should you have additional questions on the interpretation and application of the GST/HST, please contact a GST/HST Rulings officer at 1-800-959-8287.
Sincerely,
Andrew Kaye
Senior Rulings Officer
Governments Sectors and Indigenous Affairs Unit
Public Service Bodies and Governments Division
GST/HST Rulings Directorate
FOOTNOTES
1 R.S.C., 1985, c. I-5
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