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: 154236
Business Number […]
March 27, 2014
Dear [Client]:
Subject: GST/HST INTERPRETATION
Application of the GST/HST to supplies made to Indians, Indian bands and band-empowered entities
Thank you for your letter of May 28, 2013, and your fax of July 2, 2013, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) on workshops and driving lessons provided to Indians (Footnote 1) and Indian bands (“bands”).
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 (effective April 1, 2013) and 15% in Nova Scotia. The GST applies in the rest of Canada at the rate of 5%.
Effective April 1, 2013, the 12% HST in British Columbia has been replaced by the 5% GST and a provincial sales tax.
All legislative references are to the Excise Tax Act (ETA) unless otherwise specified.
From the information provided […], we understand the following:
1. You are a certified driving instructor and the owner of […] (“the driving school”) that is located in […][Province 1].
2. The driving school is registered for the GST/HST.
3. The driving school provides driving lessons to Indian clients who are resident on a reserve. These clients are picked up from their residences on a reserve and provided with driving lessons. The driving lessons take place partly on a reserve and partly off a reserve.
4. The driving school also provides driving lessons totally off a reserve to Indian clients who are resident in [Province 1].
5. The Indian clients possess Certificate of Indian Status cards.
6. The driving school’s clientele also includes bands, or band organizations, that are located on a reserve […].
7. The driving school contracts with the First Nation to provide a [#]-day workshop on the reserve that covers theory based on the Driver’s Handbook.
8. The First Nation then sponsors (pays for) the driving lessons for those participants who pass their learner’s test. […]. The hands on driving lessons are provided partly on a reserve and partly off a reserve.
RULING REQUESTED
You have asked for a ruling on the following questions:
1. What is the tax status of the supply of driving lessons made to a client that is an Indian that has a valid Certificate of Indian Status card when the client is picked up on a reserve and the driving lessons are provided partly on a reserve and partly off a reserve?
2. What is the tax status of the supply of driving lessons made to a client that is an Indian that has a valid Certificate of Indian Status card when the client is picked up at an off-reserve location and the driving lessons take place off a reserve?
3. What is the tax status of the supply of a workshop (classroom instruction) made to a band or band organization, as well as the driving lessons that are given to the qualifying participants?
Pursuant to GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service, a ruling provides the Canada Revenue Agency’s (CRA’s) position on specific provisions of the legislation as these relate to a clearly defined fact situation of a particular person, and where all of the relevant facts and supporting documentation have been presented in writing. The CRA reserves the right not to issue a ruling where it considers that one would not be appropriate. In this case, we are unable to issue a written ruling, as the information provided does not relate to a clearly defined fact situation of a particular person to provide a determination. We are therefore issuing the following interpretation, which is a general explanation of the relevant legislative provisions and how they would apply.
INTERPRETATION GIVEN
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 administrative policy of the CRA concerning the application of the GST/HST to Indians, bands and band-empowered entities is explained in GST/HST Technical Information Bulletin B-039, GST/HST Administrative Policy – Application of the GST/HST to Indians (B-039). The guidelines in B-039 are consistent with the relieving provisions in section 87 of the Indian Act affecting the personal property of an Indian or a band situated on a reserve. B-039 can be found on the CRA’s website at http://www.cr-arc.ca/E/pub/gm/b-039/b-039-e.html.
In addition, the guidelines reflect 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 of B-039 have been met. B-039 defines a band-empowered entity as a corporation, association, society, or other organization that is owned or controlled by a band, a tribal council or a group of bands other than a tribal council. B-039 is applicable to those band-empowered entities that are situated on a reserve. A band-empowered entity is considered to be situated on a reserve when the entity maintains a presence on a reserve. Further information on whether or not a specific entity meets the owned or controlled conditions and is therefore a band-empowered entity can be found in B-039.
Tax relief as explained in B-039 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. A list of First Nations that have imposed an FNGST can be found on the CRA’s website http://www.cra-arc.gc.ca/tx/bsnss/tpcs/gst-tps/frstntns/fngstpp-eng.html.
Services (driving lessons) provided to Indians
The following information is in response to your first two questions.
Where a service such as a driving lesson is performed totally on a reserve for an Indian who is on a reserve at the time the service is performed, the service will be relieved of the GST/HST. Further, tax relief is subject to the documentary evidence that must be kept by vendors as noted in B-039.
Indians must pay the GST/HST on all taxable 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 B-039.
Therefore, driving lessons provided by the driving school to an Indian will be relieved of the GST/HST where the lessons are given totally on a reserve. The GST/HST will apply to driving lessons where those lessons are provided partly on and partly off a reserve. Whether the Indian lives on or off a reserve is not relevant for determining whether the service is provided on a reserve to an Indian.
Goods and Services provided to Bands or band-empowered entities
The following is in response to your third question.
Driving lessons
Services, such as driving lessons, whether acquired on or off a reserve by a band or band-empowered entity, would be relieved of the GST/HST where the services are for band management activities or for real property on a reserve and all other conditions described in B-039 are met. As well, all services acquired by a band or band-empowered entity that are not for band management activities or for real property on a reserve are subject to the GST/HST regardless of whether the service is acquired on or off a reserve.
Band management activities are defined in B-039 as activities or programs undertaken by a band or band-empowered entity that are not commercial activities for which they would otherwise be entitled to an input tax credit. Therefore, services acquired in the course of commercial activities are not relieved of GST/HST.
When services are provided to bands or band-empowered entities relieved of the GST/HST, a certificate must be provided by the band or band-empowered entity to the vendor stating that the services are being acquired for band management activities or real property on a reserve. This certificate must be retained by the vendor for verification by audit. A sample of what should be included in the certification is provided in the enclosed copy of B-039.
Workshops
Under B-039, Indians, bands and unincorporated band-empowered entities can acquire property situated on or delivered to a reserve relieved of the GST/HST. Incorporated band-empowered entities can acquire property situated on or delivered to a reserve relieved of GST/HST where the property is for band management activities. The remaining conditions of B-039 must be met in order for relief of the GST/HST to apply.
A workshop is generally the supply of a right of admission, which is intangible personal property (IPP) under the ETA. Factors the generally indicate that a supply is one of IPP are:
* attendance at the activity is sufficient for the participant to receive evidence of successful or satisfactory completion of the activity;
* the supplier’s purpose with respect to the activity is principally to provide information to, or to facilitate the exchange of information amongst participants;
* there are no formal prerequisites to attend the activity and participation in the activity is not a prerequisite for participation in another activity;
* the activity is promoted as a stand-alone activity;
* the activity is promoted to the general public;
* there are no tests administered;
* the material covered during the activity is narrowly focused;
* the activity is for a short duration.
The above list is meant to be a guideline and is not all inclusive. There may be other factors that could apply to a particular situation.
Many workshops fall into the category of IPP. As IPP is not a physical object, it cannot be delivered to a reserve. You indicated that you provide workshops at a location on a reserve. Therefore, if the workshop you provide is IPP (that is, the general factors described in the paragraph above apply to the workshop) and is held at a location on a reserve, the workshop will be relieved of the GST/HST if supplied to a band or an unincorporated band-empowered entity, or to an incorporated band-empowered entity when acquired for band management activities.
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 Canada Revenue Agency 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 613-952-9264. 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,
C. Christmas
Aboriginal Affairs and Educational Sectors Unit
Public Service Bodies and Governments Division
Excise and GST/HST Rulings Directorate
FOOTNOTES
1 The CRA recognizes that many First Nations people in Canada prefer not to describe themselves as Indians. However, the term Indians is used in this letter because it has a legal meaning in the Indian Act.
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