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: 173103r
Business Number: […]
Dear [Client]:
Subject: GST/HST RULING
Relief of the GST/HST available to Indian bands on surveying services of settlement lands
Thank you for your fax of May 3, 2016, concerning […] the application of the Goods and Services Tax (“the GST”)/Harmonized Sales Tax (“the HST”) to the supply of surveying services of settlement lands acquired by an Indian band.
The HST applies in the participating provinces at the following rates: 13% in Ontario; 14% in Prince Edward Island; and 15% in New Brunswick, Newfoundland and Labrador and Nova Scotia. The Government of Prince Edward Island has proposed to increase the rate of the HST in that province from 14% to 15% effective October 1, 2016. The GST applies in the rest of Canada at the rate of 5%.
All legislative references are to the Excise Tax Act (“the ETA”) unless otherwise specified.
STATEMENT OF FACTS
The following information was provided in your [correspondence].
1. […].
2. […].
3. The First Nation […][is located in province X].
4. […][Information on GST/HST registration].
5. […][Information on GST/HST rebates].
6. The First Nation currently has […] reserves, […][located in province X].
7. Pursuant to a Settlement Agreement […][the land is located in province X].
8. According to your letter, the Settlement Agreement provides, […], for the following: […]
9. You stated that […][information in] the Settlement Agreement require[s] the First Nation to undertake a survey of the settlement lands identified at point 7 above. The First Nation […] hired […][Survey Company X] to conduct the requisite survey.
10. The scope of the survey work to be undertaken by [Survey Company X] includes the following:
• […][information on activities and land to be surveyed]
• Drafting numerous reference plans involving […] computer-aided design (CAD) drafting time.
11. The total cost of the survey services for the Settlement Lands is estimated at $[…]. You state that […] the Settlement Agreement requires the First Nation to pay for the cost of the survey.
RULING REQUESTED
You have asked that we review the facts […] and rule that the First Nation is entitled to relief of the GST/HST on the supply of the surveying service made by [Survey Company X] to the First Nation.
RULING GIVEN
Based on the facts, we rule that the First Nation is not entitled to relief of the GST/HST on the supply of the surveying service made by [Survey Company X]. […].
EXPLANATION
[…], the CRA’s Technical Information Bulletin B-039, Administrative Policy – Application of the GST/HST to Indians (“Bulletin B-039”), summarizes the tax treatment of purchases by Indians, bands and band-empowered entities.
Relief of tax under section 87 of the Indian Act applies to personal property situated on a reserve. Bulletin B-039 is consistent with the tax relieving provisions of section 87 of the Indian Act.
Bulletin B-039 also reflects the tax policy of the Government of Canada by extending relief of tax to supplies other than personal property, such as services which are not relieved of the GST/HST under section 87 of the Indian Act, acquired by Indians, bands and band-empowered entities where the conditions contained in Bulletin B-039 have been met.
Under Bulletin B-039, in order for a service acquired by a band on or off a reserve to be relieved of GST/HST, the service must be for band management activities or for real property on a reserve. Based on the policy intent of the Government of Canada, the CRA has consistently taken the position that a band is not entitled to acquire services for real property off reserve on a tax-relieved basis.
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 application rules in respect of taxable supplies made in Canada, even if acquired for BMA. This has been the longstanding position of the CRA as it was not the original intent of Bulletin B-039 to extend relief of the GST/HST to services for real property off a reserve. Accordingly, all services for real property off a reserve acquired by a band are subject to GST/HST.
As noted in the facts you provided, there is a process that must be undertaken by a First Nation in order for settlement land to become a reserve. Indigenous and Northern Affairs Canada’s website explains the process in the Land Management Manual, Chapter 10, Directive 10-1, Additions to Reserves/New Reserve that is required in order for settlement lands to become reserve lands. Settlement lands are not automatically reserves as defined in the Indian Act. It is our understanding that the settlement lands are not a reserve until the process requesting that settlement lands become reserve lands is complete.
Therefore services provided to the First Nation for real property off a reserve, being the settlement lands, including the surveying of those lands that takes place prior to those lands becoming reserve lands are not relieved of the 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(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
Email this Content