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, 11th floor
320 Queen Street
Ottawa ON K1A 0L5
[Addressee]
Case Number: 194728
Business Number: […]
Dear [Client]:
Subject: GST/HST RULING
[…][Whether certain legal services are acquired in respect of band management activities and relieved of GST/HST]
Thank you for your facsimile of [mm/dd/yyyy], concerning the application of the goods and services tax/harmonized sales tax (GST/HST) to the legal services supplied by […][the Law Firm]. We apologize for the delay in our response.
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.
STATEMENT OF FACTS
The following facts originate from the information contained in your facsimile dated [mm/dd/yyyy], our telephone conversations, and research […].
1. […] (“Law Firm”) is the legal counsel for [the] […](“First Nation’’).
2. The First Nation is a band as defined under the Indian Act.
3. […]The First Nation is located in […][the province].
4. The First Nation is not registered for GST/HST purposes.
5. The corporation […](“Corporation”) […] is wholly owned by the First Nation.
6. […][The Corporation] owns and operates […][X, a business]. The land on which […][X] is situated is not part of the reserve of the First Nation.
7. [The Corporation] is registered for GST/HST purposes.
8. […], […][the Corporation sustained losses from damage to X’s site].
9. […]
10. The First Nation retained the Law Firm […] [in relation to the loss]. You stated that no written agreement between the Law Firm and the First Nation or [the Corporation] exists.
11. […]
12. […], the Law Firm was retained by the First Nation rather than [the Corporation].
13. […] the Law Firm […] has been reporting to […] the legal counsel for the First Nation.
14. The Law Firm issued invoices to the First Nation and to [the Corporation] in respect of the legal services that were supplied.
15. […].
16. […].
17. All amounts that the Law Firm has been paid to date in relation to the legal services have been paid by the First Nation.
18. […].
RULING REQUESTED
You would like to know whether the legal services […] supplied […][by the Law Firm] were acquired for band management activities and should therefore have been relieved of the GST/HST.
RULING GIVEN
Based on the information provided, the supplies of legal services are not relieved of the GST/HST as the conditions for relief under Technical Interpretation Bulletin B-039, GST/HST Administration Policy – Application of the GST/HST to Indians are not met (Bulletin B-039).
EXPLANATION
GST/HST Technical Information Bulletin B-039, GST/HST Administrative Policy – Application of the GST/HST to Indians (“Bulletin B-039”), summarizes CRA’s administrative policy concerning treatment of supplies made to, or by, Indians, Indian bands and band-empowered entities (BEEs). The treatment of purchases made by an Indian or an Indian band under the GST/HST is consistent with section 87 of the Indian Act under which the personal property of an Indian or an Indian band situated on a reserve and their interests in reserves or designated lands qualify for tax relief.
Bulletin B-039 also reflects the tax policy of the Government of Canada by extending relief of GST/HST to supplies of services when the conditions contained in Bulletin B-039 have been met.
Relief of GST/HST Available to Indian bands and Band-Empowered Entities
Under Bulletin B-039, the rules for tax relief related to services purchased by Indian bands and BEEs are the same. Services acquired on or off a reserve by an Indian band or a BEE (incorporated or unincorporated) for band management activities or for real property on a reserve are not subject to the GST/HST.
The CRA’s interpretive policy position has been that the expression “for band management activities or for real property on a reserve” be read as a single inclusive term. That is, services acquired for real property off a reserve are subject to the normal GST/HST rules in respect of taxable supplies made in Canada, even if acquired for band management activities. Accordingly, all services for real property off a reserve acquired by an Indian band or a BEE are subject to GST/HST.
Band management activities are activities or programs undertaken by an Indian band or BEE that are not commercial activities for which they would otherwise be entitled to claim input tax credits. In determining whether the acquisition of a supply is for band management, the output of the activity or program will be the determining factor, as opposed to the objectives of the activity or program.
To clarify, band management activities are those activities carried out by an Indian band or a BEE that relate to their 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 Indian band or the BEE would otherwise be entitled to input tax credits.
[…], the CRA does not consider […][the legal services described] to be a band management activity for the purposes of Bulletin B-039. As the services were not acquired by an Indian band or a BEE for band management activities or for real property on a reserve, the supplies of the legal services are not relieved of GST/HST under Bulletin B-039.
In accordance with the qualifications and guidelines set out in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service, the Canada Revenue Agency (CRA) is bound by the ruling given in this letter provided that: none of the issues discussed in the ruling are currently under audit, objection, or appeal; no future changes to the ETA, regulations or the CRA’s interpretative policy affect its validity; and all relevant facts and transactions have been fully and accurately disclosed.
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 343-573-6095. Should you have additional questions on the interpretation and application of GST/HST, please contact a GST/HST Rulings officer at 1-800-959-8287.
Yours truly,
Andrew Kaye
Senior Rulings Officer
Government Sectors and Indigenous Affairs Unit
Public Services Bodies and Governments Division
GST/HST Rulings Directorate
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