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
Case Number: 162108
Business Number: […]
Dear [Client]:
Subject: GST/HST INTERPRETATION
Requirement to charge GST/HST on sales of cigarettes to Indians
Thank you for your letter of May 5, 2014, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to cigarettes sold to Indians and delivered to a reserve.
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.
RULING REQUESTED
You have requested a ruling as to whether […]([…]“the company”) is required to charge GST/HST on sales of cigarettes made to Indians.
In the incoming letter you have listed various scenarios. However, in all cases the initial transaction involves the sale of the property to Indians by the company. The company intends to sell cigarettes to Indians and deliver those cigarettes to a reserve. The subsequent transactions involve the Indian’s sale of the purchased product.
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. We are therefore issuing the following interpretation, which is a general explanation of the relevant legislative provisions and how they might apply.
INTERPRETATION GIVEN
Technical Information Bulletin B-039, GST/HST Administrative Policy – Application of the GST/HST to Indians, states that Indians and Indian bands can acquire property (e.g. cigarettes) off a reserve without paying the GST/HST, provided the following conditions are met:
* They show the appropriate documentation to vendor; and
* The property is delivered to a reserve by the vendor or the vendor’s agent.
Documentary evidence to be retained by the vendor
The vendor is required to keep adequate evidence that a sale for which no GST/HST was payable was made to an Indian. 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 those cards;
* Where the Indian shows the original Temporary Confirmation of Registration Document (TCRD), the registration number and the expiration of the TCRD.
Along with the information collected from a status card or TCRD, a vendor is required to maintain proof of delivery.
Delivery by the vendor
Where property is delivered to a reserve in the vendor’s own vehicle, the vendor must maintain acceptable proof that delivery was made to a reserve. This will be indicated on the invoice issued by the vendor and the vendor’s internal records. Acceptable evidence may be the driver’s log information, expense reports (e.g. fuel purchases, mileage logs, dispatch records), disbursement records relating to the delivery, and signature of the Indian purchaser attesting the property was received on a reserve. Such proof must be maintained in addition to the proof of Indian status.
Delivery by the vendor’s agent
Where the property is delivered by the vendor’s agent to a reserve, the vendor must maintain:
* Proof of Indian status;
* Proof of delivery being made to the reserve (e.g., a waybill, postal receipt showing a reserve address, signature of the purchaser accepting delivery on a reserve and an invoice from the agent for delivery services provided).
An agent of the vendor includes an individual or company under contract with the vendor for making deliveries (e.g., postal services, couriers). The vendor will normally bear all the risks of the agent during the course of the delivery as if these risks were the vendor’s own, unless specifically covered in the agency agreement.
A carrier who is under contract with the purchaser is not regarded as the agent of the vendor. In addition, undertakings by purchasers of property to deliver the property to themselves as agents of the vendor are not acceptable to the CRA.
In accordance with the qualifications and guidelines set out in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service, the interpretation(s) given in this letter, including any additional information is not a ruling and does not bind the Canada Revenue Agency (CRA) with respect to a particular situation. Future changes to the ETA, regulations, or the CRA’s interpretative policy could affect the interpretation(s) or the additional information provided herein.
For your convenience, find enclosed a copy of GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service.
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
Email this Content