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.
Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 15th floor
320 Queen Street
Ottawa ON K1A 0L5
[Addressee]
Case Number: 162974
Business Number: […]
Dear [Client]:
Subject: GST/HST INTERPRETATION
Supply of boat tours
Thank you for your letter of [mm/dd/yyyy], concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to boat tours supplied by […](“your client”).
The HST applies in the participating provinces at the following rates: 13% in Ontario, New Brunswick and Newfoundland and Labrador, 14% in Prince Edward Island and 15% in Nova Scotia. 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
We understand from your […][correspondence] that:
1. you are making this inquiry on behalf of your client who is an Indian (Footnote 1) under the Indian Act;
2. your client is […] registered for GST/HST purposes whose business activities consist of […], providing […] boat tours (“the boat tours”) by canoe and […](“the boat”), and operating a […] and convenience store on a reserve in [Province X];
3. your client sells tickets for the boat tours from his convenience store that is located on a reserve;
4. a guide accompanies the participants on the boat tours that last for […] hours to […] hours. During the boat tour the guide provides information on the history of the area, sings songs, and tells stories. Some of the boat tours stop and the participants leave the boat and explore the area (places that are on reserve land) and then get back into the boat to continue the tour;
5. participants enter the boats from either a dock in the water at […][location A], or by walking out into the water, depending on the type of boat used. […]. The boat tours go out around […] and return to [location A]. The water from which the boat tours depart is ocean and is not part of the reserve;
6. your client will provide lunch to the participants if requested, but the lunch must be ordered and paid for […] days in advance of the boat tour. […] shows the price for the lunch separately from the tour. The price will be added to the price of the boat tour when it is ordered and a single price for the boat tour and the lunch is charged and shown on the invoice to the purchaser. The lunch is prepared on the reserve;
7. more than 90% of the participants are First Nations members (Indians who are eligible for relief of the GST/HST under section 87 of the Indian Act); and
8. the boat tours occur within Canada.
RULING REQUESTED
Your have requested a ruling as to whether your client is required to charge and collect the GST on the supply of boat tours and lunches made to Indians.
RULING GIVEN
The supply of the boat tour is taxable when made to Indians. The supply of the lunch is relieved of the GST when made to Indians where the conditions of GST/HST Technical Information Bulletin B-039, GST/HST Administrative Policy – Application of the GST/HST to Indians (“Bulletin B-039”) are met.
EXPLANATION
Generally, all supplies of goods and services made in Canada are subject to the GST/HST unless the supply is specifically identified as being an exempt supply or a zero-rated supply. “Exempt supplies” are listed in Schedule V and are not subject to GST/HST. “Zero-rated supplies” are taxable at the rate of 0% and are listed in Schedule VI.
Section 87 of the Indian Act exempts personal property of an Indian or a band situated on a reserve. That is, the property must be situated on a reserve in order for tax relief to apply.
The CRA's administrative policy is consistent with the relieving provisions of section 87 of the Indian Act affecting the personal property of an Indian or a band situated on a reserve. The administrative policy concerning the application of the GST/HST to Indians, and bands is explained in Bulletin B-039. As well, Bulletin B-039 reflects the tax policy of the Government of Canada by extending relief to other supplies, such as services, acquired by Indians, bands or band-empowered entities where the conditions in Bulletin B-039 have been met.
As explained in Bulletin B-039, tax relief does not apply to First Nations and their members where a First Nation has imposed a First Nations Goods and Services Tax (FNGST) on their lands.
Bulletin B-039 states that Indians must pay the GST/HST on all taxable property that is not purchased on a reserve or delivered to a reserve by the vendor or the vendor’s agent, and on services that are not performed or do not occur totally on a reserve, unless the service is purchased for real property interests on a reserve, or is a transportation service that meets the required conditions for relief in Bulletin B-039.
In order to determine whether GST/HST applies to the supply at hand, it first must be determined whether the supply is one of property or a service.
From the information provided, the supply is a “tour package” as defined in 163(3).
A “tour package” is defined in subsection 163(3) to mean a combination of two or more services, or of property and services, that includes transportation services, accommodation, a right to use a campground or trailer park, or guide or interpreter services, where the property and services are supplied together for an all-inclusive price. As stated in GST/HST Memorandum 27.1, Calculating the GST/HST on Tour Packages, a tour package is a single supply of a service for GST/HST purposes.
A tour package is not a transportation service for purposes of Bulletin B-039. As noted above, a tour package is a single supply of a service, and a service must be performed totally on a reserve when supplied to an Indian individual in order to be relieved of the GST/HST. The supply of a domestic tour package that does not totally take place on a reserve supplied to an Indian individual is subject to […][the tax].
Even though the invoice shows a single consideration for the tour and the lunch it does not mean that the supply is a single supply. GST/HST Policy Statement P-077R2, Single and Multiple Supplies, explains that the way in which the consideration for a transaction is set out does not in itself determine whether there are one or more supplies; the interrelationships among the various elements of a transaction as well as the purpose of the transaction and the needs of the customer must all be considered. The lunch supplied during the tour to participants is a separate supply as it is not ordinarily offered as part of the tour. The lunch is purchased separately from the tour for a specified price. The supply of a lunch that is prepared on a reserve is considered to be situated on a reserve and would be relieved of the GST when supplied to an Indian where the remaining conditions in Bulletin B-039 are met (e.g. the vendor maintains adequate evidence that the supply was made to an Indian).
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(s) given in this letter provided that: none of the issues discussed in the ruling(s) 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 613-954-4280. 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,
K. Bennett
Aboriginal Affairs and Educational Sectors Unit
Public Service Bodies and Governments Division
Excise and GST/HST Rulings Directorate
FOOTNOTES
1 The Canada Revenue Agency (CRA) recognizes that many First Nations people in Canada prefer not to describe themselves as Indians. However, the term Indian is used in this letter because it has a legal meaning in the Indian Act.
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