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: 158433
Business number: […]
May 06, 2014
Dear [Client]:
Subject: GST/HST INTERPRETATION
Deeming [the] […][Organization] to be on a reserve
Thank you for your letter of [mm/dd/yyyy], concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to property acquired by [the] […]([…][Organization]).
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Effective April 1, 2013, the 12% HST in British Columbia has been replaced by the 5% GST and a provincial sales tax.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.
FACTS
In [yyyy] the CRA ruled that the [Organization] was a band-empowered entity because it met the condition of being controlled by a band, tribal council or a group of bands other than a tribal council, and it maintained a presence on a reserve. As a band-empowered entity, the [Organization] is entitled to relief of the GST/HST on purchases of property and services when all the conditions of B-039 are met.
The [Organization] is a GST/HST registrant (#).
The [Organization] is a registered charity (#) that provides lodging and care to residents of […][Province 1] First Nation communities that are travelling to […][City 1, Province 1], for pre-approved medical care.
Although the [Organization]’s Head Office is located on the […] Reserve, the facility through which the [Organization] provides lodging and care (the “site”) is located in [City 1, Province 1].
[…].
We understand that the [Organization] is not a selected public service body (footnote 1).
REQUEST
In your letter you requested that the Canada Revenue Agency (CRA) either designate the [Organization] as a hospital authority, or “deem” the site that the [Organization] operates to be situated on a reserve so that property delivered to the [Organization] would meet the delivery requirement for property set out in Technical Information Bulletin B-039, GST/HST Administrative Policy – Application of the GST/HST to Indians (B-039). That is, property delivered to the [Organization]’s site would be relieved of the GST/HST as it would meet the requirement in B-039 that property be delivered to a reserve.
RESPONSE
We regret to inform you that the CRA is unable to “deem” the [Organization]’s site to be situated on a reserve. To extend tax relief beyond the current administrative policy would be precedent setting and inconsistent with decisions made in the past to deny similar requests by other parties and would be contrary to the Government of Canada’s tax policy in this matter.
EXPLANATION
Section 87 of the Indian Act exempts personal property of an Indian or Indian 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 described in B-039 is consistent with the relieving provisions of section 87 of the Indian Act affecting the personal property of an Indian or an Indian band situated on a reserve. The CRA’s policy also extends relief of tax to band-empowered entities that maintain a presence on a reserve.
In order for relief of the GST/HST to apply to purchases of property, the property must be acquired on a reserve or be delivered to a reserve by the vendor or the vendor’s agent. The delivery policy applies to all off-reserve acquisitions of property made by Indians, Indian bands and band-empowered entities. The property can be delivered to any reserve and be relieved of the GST/HST where all of the remaining conditions of B-039 are met.
The only exception to the requirement for delivery is set out in the policy statement respecting remote stores P-246, Remote Stores and Other Off-reserve Stores with Significant Sales to Indians, Indian Bands and Band-empowered Entities that allows a qualified vendor to waive delivery.
You stated in your letter that the [Organization] is a registered charity. As the [Organization] is a registered charity within the meaning assigned to that expression by subsection 248(1) of the Income Tax Act and it is not a public institution, it is a charity for purposes of the ETA.
Generally, a charity can claim a public service body (PSB) rebate on tax paid or payable on eligible property or services acquired, imported or brought into a participating province during a claim period. A charity is entitled to a PSB rebate of the GST or the federal part of the HST using the federal rebate factor of 50%, regardless of where in Canada the property or services are intended to be consumed, used or supplied.
Where a charity that is not a selected public service body is resident in only one province and that province is a participating province the charity will be entitled to a PSB rebate of the provincial part of the HST paid or payable on property or services regardless of where the HST was incurred. For example, if a charity is only resident in Ontario the PSB rebate of the provincial part of HST paid or payable is calculated using the provincial rebate factor for charities resident in Ontario, which is 82%.
The following two guides, RC4034 GST/HST Public Service Bodies Rebate and RC4082 GST/HST Information for Charities, provide further information on PSBs and rebates available to them. These publications can be found on the CRA’s website at www.cra-arc.gc.ca.
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 Donna Harding directly at 613-954-7957. 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,
Philippe Nault
Director
Public Service Bodies and Governments Division
Excise and GST/HST Rulings Directorate
Footnote:
1. Selected public service body is defined in subsection 259(1) of the Act to mean a school authority, university or public college that is established and operated otherwise than for profit; hospital authority; municipality; facility operator; or external supplier.
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