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: 177202
Dear [Client]:
Subject: GST/HST INTERPRETATION
Documentation requirements [for vendors to make taxable supplies relieved of the GST/HST to Indians]
Thank you for your letter of April 4, 2016, concerning the documentation requirements necessary for vendors to make taxable supplies relieved of the Goods and Services Tax (“the GST”)/Harmonized Sales Tax (“the HST”) to Indians.
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 Governments of New Brunswick and Newfoundland and Labrador have proposed to increase the rate of the HST in those provinces from 13% to 15% effective July 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.
INTERPRETATION REQUESTED
We understand that you are enquiring as to why the Canada Revenue Agency (“the CRA”) requires an Indian to provide documentary evidence of their registration as an Indian under the Indian Act, as explained in the CRA’s GST/HST Technical Information Bulletin B-039, GST/HST Administrative Policy – Application of the GST/HST to Indians (“TIB B-039”), in order to make purchases of property and services on a tax relieved basis.
INTERPRETATION GIVEN
Section 87 of the Indian Act provides tax relief for “the personal property of an Indian or band situated on a reserve”. An Indian, as defined in the Indian Act, is a person who pursuant to the Indian Act is registered as an Indian or is entitled to be registered as an Indian. Tax relief is not available to individuals who do not qualify as Indians under the Indian Act.
The CRA’s administrative policy concerning the application of the GST/HST to Indians is explained in TIB B-039. The guidelines in TIB B-039 are fully consistent with the relieving provisions in section 87 of the Indian Act affecting the personal property of an Indian situated on a reserve. In addition, the guidelines reflect governmental tax policy by extending relief to other supplies, such as services, acquired by Indians where the conditions of TIB B-039 have been met. It is a question of fact whether a taxable supply made to an Indian meets the conditions for relief of the GST/HST.
A GST/HST registrant is generally responsible for collecting the GST/HST on all taxable supplies (other than zero-rated supplies) of property and services made in Canada. In general, under subsection 221(1), every person who makes a taxable supply shall, as agent of the Crown, collect the tax payable by the recipient in respect of the supply, and they will be required to remit such tax pursuant to subsection 228(2). A taxable supply is defined in subsection 123(1) to mean “a supply that is made in the course of a commercial activity” where the definition of “commercial activity” reads in part to mean “a business carried on by a person…except to the extent to which the business involves the making of exempt supplies by the person”.
Subject to the provisions of Part IX of the ETA, section 165 requires that every recipient of a taxable supply (other than a zero-rated supply) made in Canada pay tax at the applicable rate to Her Majesty in right of Canada on the value of the consideration for the supply.
As explained in TIB B-039, where relief of the GST/HST was applied to a taxable supply the vendor must maintain documentary evidence required to substantiate the non-collection of the GST/HST. Where that supply was made to an Indian, registrants are required to maintain adequate documentary evidence that the taxable supply for which GST/HST would normally be payable was made to an Indian. Therefore, in order for a vendor to not charge the GST/HST on a taxable supply made to an Indian, the Indian must provide documentary evidence to the vendor that they are entitled to relief of the tax. As well, the remaining conditions in TIB B-039 must be met.
In order to satisfy the documentary evidence requirement noted above, the vendor is required to obtain the appropriate information from the respective Indian’s Certificate of Indian Status card (“status card”) or Temporary Confirmation of Registration Document (“TCRD”), as described in TIB B-039, as evidence that the supply for which no GST/HST was payable was made to an Indian purchaser registered under the Indian Act.
The vendor must make a notation of the following information on the invoice or other sales document that will be retained by the vendor:
* where the Indian shows the original status card, the registry number or the band name and family number (commonly referred to as the band number/treaty number) found on the card;
* where the Indian shows the original TCRD, the registration number and the expiration of the TCRD.
Where a vendor sells taxable property to an Indian and the Indian chooses not to provide documentary evidence to the vendor allowing the vendor to provide and substantiate relief of tax, the vendor is required to collect the GST/HST from the purchaser. Vendors who do not collect GST/HST on taxable supplies of property and do not have documentary evidence verifying that the supply was made to an Indian on a tax relieved basis must still remit to the CRA the tax that should have been collected.
If a vendor decides to charge GST/HST on certain transactions, for instance, where they may not be satisfied that the particular transaction does not attract tax, any amount that the vendor collects as tax is deemed to be held in trust for the Crown in accordance with subsection 222(1), whether or not the tax was properly chargeable to the vendor’s customer. Pursuant to subsection 225(1), amounts collectible or collected “as or on account of tax” must be accounted for in the person’s net tax calculation for the reporting period in which the amount was collected or became collectible. Furthermore, pursuant to subsection 228(2), if the net tax calculated pursuant to subsection 225(1) is a positive amount, that amount must be remitted on or before the due date for the person's return for that reporting period.
However, where a vendor has charged GST/HST to an Indian in circumstances where the tax was not exigible, and the Indian has paid an amount as GST/HST, the Indian may file a rebate pursuant to section 261 within the two-year time limit provided that all the other conditions are satisfied. Sufficient information to verify that the claimant is an Indian, such as a copy of the purchaser's status card or TCRD, must be submitted with the rebate application.
The foregoing comments represent our general views with respect to the subject matter of your request. These comments are not rulings and, in accordance with the guidelines set out in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service, do not bind the CRA with respect to a particular situation. Future changes to the ETA, regulations, or our interpretative policy could affect this interpretation.
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
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