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.
Date October 2, 2014
From Karen Bennett
Senior Rulings Officer
Aboriginal Affairs and Educational Sectors Unit
Public Service Bodies and Governments Division
Excise and GST/HST Rulings Directorate
Legislative Policy and Regulatory Affairs Branch
To [Addressee]
Case Number: 164181
Subject: GST/HST INTERPRETATION
Acceptable documentary evidence of delivery to a reserve
I am writing in response to your [correspondence] of [mm/dd/yyyy], in which you outlined a scenario where a vendor sells property to an Indian and delivers the property to a reserve. You have submitted a copy of the documents that the vendor will maintain as evidence that the sale was made to an Indian and the property was delivered to a reserve.
The details of the scenario provided in your [correspondence] are as follows:
1. An Indian purchases property from a vendor;
2. The vendor, or a person hired by the vendor (i.e., an agent of the vendor), delivers the property to a reserve;
3. The Indian, or a person authorized by the Indian, accepts delivery of the property on the reserve;
4. A band official from that reserve confirms and acknowledges that the property was delivered to the reserve by signing and providing, to the vendor, a document […]. This document identifies the property that was delivered, the date it was delivered, by whom the property was delivered, the name of the Indian purchaser and the registry number from the Certificate of Indian Status card of the Indian;
5. The band charges a processing fee to cover the cost of having a band official witness the delivery to the reserve and for providing the […] document;
6. The band issues a receipt in the name of the purchaser and the vendor acknowledging receipt of the processing fee;
7. The band maintains a record of the delivery, a copy of the bill of sale and a copy of the processing fee receipt; and
8. The purchaser contracts with the vendor through a separate transaction to deliver the property from the reserve to a location off the reserve. You understand that the consideration for the service of having the property delivered to an off-reserve location is not relieved from the GST/HST.
You have attached the following documents with respect to the above scenario:
1. A letter […] indicating that the First Nation will allow access to its reserve to vendors who want to deliver property to the reserve and Indian purchasers who are not members of the First Nation only if certain conditions are met. The letter goes on to present the conditions, and states that a band official for the First Nation is to be present to witness and verify that the delivery did in fact take place on the reserve, that the First Nation will issue confirmation that delivery took place on the reserve for the vendor’s records, and that a processing fee will be charged for each transaction (delivery) that takes place on the reserve. This is to cover the cost of the band official witnessing the delivery and providing a […] document;
2. A copy of […] document confirming that on a specified date the vendor delivered a specific vehicle to the reserve for the Indian purchaser named therein. This document is signed by a band official;
3. A copy of the vendor’s bill of sale;
4. A copy of the Indian purchaser’s Indian Status card and the insurance certificate;
5. A copy of the cheque made payable to the First Nation from the vendor for payment of the processing fee charged by the First Nation for verifying delivery to the reserve; and
6. A copy of the receipt issued in the name of the purchaser and the vendor from the First Nation indicating that payment of the processing fee was received.
[…][INTERPRETATION REQUESTED]
1. Will the sale of the property to the Indian be relieved of the GST/HST, and will the vendor meet the documentary requirements of Technical Information Bulletin B-039, GST/HST Administrative Policy – Application of the GST/HST to Indians (TIB B-039) by maintaining copies of the above noted documents?
[…][INTERPRETATION GIVEN]
It is a question of fact whether a sale of property made to an Indian or a band meets the conditions for relief of the GST/HST, and the vendor meets the requirement of maintaining sufficient documentary evidence that the property was delivered to a reserve.
As you are aware, the CRA’s treatment of purchases of property, including vehicles, by Indians or bands is consistent with section 87 of the Indian Act under which personal property of an Indian or a band situated on a reserve is not subject to tax (GST/HST). In order for relief of the GST/HST under section 87 of the Indian Act to apply, the property must be situated on a reserve. For purposes of section 87 of the Indian Act, the CRA has taken the administrative position that property delivered to a reserve by the vendor or the vendor’s agent meets the condition of being situated on a reserve.
TIB B-039 summarizes the CRA’s policy concerning the treatment of purchases by Indians and bands for purposes of the GST/HST. As explained in TIB B-039, property may be acquired by an Indian or a band, without the payment of GST/HST provided the Indian or band provides appropriate documentation to the vendor and the property is located on a reserve or is delivered to a reserve by the vendor or the vendor’s agent. If the property is not delivered to a reserve, the property does not meet the condition of being situated on a reserve and will not be relieved of the GST/HST.
Documentary Evidence
Vendors must maintain adequate evidence that the supply for which no GST/HST was payable was made to an Indian or a band. As evidence that a sale of property was made to an Indian, the vendor will require the appropriate information from the Certificate of Indian Status card as explained in TIB B-039 to satisfy the documentary requirement that the purchaser is an Indian as registered under the Indian Act. The CRA will accept as adequate evidence a notation on the invoice, or other sales document which is retained by the vendor, of the nine or ten digit registry number or the band name and family number (commonly referred to as the band number/treaty number). As evidence that a sale of property was made to a band, the vendor is required to obtain a certificate from the band attesting to the fact that the purchaser is a band. The vendor must maintain a copy of the certificate as documentary evidence.
Vendors are also required to maintain adequate evidence that property sold from a location off a reserve to an Indian or a band on a tax relieved basis was delivered to a reserve.
Where property is delivered to a reserve in the vendor's own vehicle, proof that delivery was made to a reserve should be indicated on the vendor’s invoice and internal records, (e.g. mileage log, dispatch records). Acceptable evidence may include the driver’s log information, expense reports (e.g. fuel purchase) disbursement records relating to the delivery, and signature of the Indian purchaser or the Indian band’s representative attesting to receipt of the property on a reserve.
Where the property is delivered to a reserve by the vendor’s agent, proof that delivery was made to a reserve may include such records as a waybill 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 to the vendor for making deliveries (e.g. postal services, trains, boats, couriers). The vendor would 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 recipient 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. Also, tax will apply where an Indian, or a band, takes possession of the property off a reserve and delivers the property to a reserve in his or her own vehicle.
In order for tax relief to be available the property must be that of an Indian or a band and be situated on a reserve. Therefore, where property is delivered to a reserve, the Indian or band must take possession of the property on the reserve in order to meet the above condition. At what point the purchaser is in possession of property acquired from a vendor is a question of fact. Several factors that may be used in determining whether possession of the property took place on or off a reserve are:
* At what location did the purchaser have the right to use the property for the first time?
* Where was the property off-loaded?
* Who is responsible for the property in case of damage to the property on route to the reserve and, who is responsible for the property in case of damage if delivered to a second location off a reserve?
* Where the property is delivered to a second location off a reserve, is there a separate contract between the purchaser and the vendor or another carrier to deliver the property to the second location? and
* Is there a separate delivery charge for delivery of the property to an off-reserve location?
It is a question of fact whether the conditions described in TIB B-039 allowing tax relief to Indians or bands are met and whether the documentary evidence retained by a vendor to support the non-collection of tax on a supply is adequate. There are no specific documentary requirements with respect to proof of delivery of a motor vehicle, as it is a question of fact and auditors will accept as evidence various documents. […]. As well, we understand that the value of the transaction(s), the frequency of the transaction(s), the nature of the supply and the status of the recipient may be factors that will be considered […] in establishing whether the requirements set out in TIB B-039 are met. […].
It is the CRA’s position that where the property is relieved of GST/HST, the delivery charges imposed by the vendor will be relieved of GST, even if separately billed, provided the conditions of TIB B-039 are met (e.g. adequate documentation must be retained by the vendor).
[…][INTERPRETATION REQUESTED]
Does the outcome change if the Indian purchaser authorizes an agent to take physical possession of the property from the vendor on the reserve and then deliver the property to the Indian from the reserve to a location off the reserve?
[…][INTERPRETATION GIVEN]
The outcome is no different than the answer to your first question. That is, sales of property made to Indians or bands are relieved of the GST/HST at the time of sale where the vendor or vendor's agent delivers the property to a reserve.
There is no requirement that the purchaser be on the reserve to receive the property. The Indian's spouse, neighbour, friend, or band official can accept delivery. For GST/HST purposes, the Indian or band has to be the recipient of the supply and the recipient is normally the person who is obligated to pay for the property. The tax relief at the point of purchase is not impacted by who accepts delivery on a reserve after a sale has been made to an Indian or a band, but rather has to do with whether the property is delivered to a reserve by the vendor or vendor’s agent.
Once the purchaser is in possession of the property on a reserve, the property may be moved off the reserve with no tax consequences attached to the property. However, the delivery service provided to the destination off the reserve would be subject to tax when acquired by an Indian as both the origin and destination do not occur on a reserve. A band can acquire services, such as transportation services, on a reserve relieved of tax when for band management activities or real property on reserve. They must pay the tax on transportation services acquired off a reserve but may file for a refund (code 8 rebate) when acquired for band management activities.
[In accordance with the qualifications and guidelines set out in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service, the interpretations given in this letter, including any additional information, are not rulings and do 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 or the additional information provided herein.]
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