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: 145130
June 19, 2012
Dear [Client]:
Subject: GST/HST RULING
Band-empowered entity
Thank you for your letter of [mm/dd/yyyy], concerning […] ([…][the Corporation]) and whether it qualifies as a band-empowered entity, as defined in GST/HST Technical Bulletin B-039, GST/HST Administrative Policy – Application of the GST/HST to Indians (B-039). Additional information (an unsigned copy of [the Corporation’s] By-Law […] Administrative and […] Staff By-Laws, as well as a list of [the Corporation’s] Board Members) was provided to this office by way of […][correspondence] on [mm/dd/yyyy].
HST applies at the rate of 15% in Nova Scotia, 13% in Ontario, New Brunswick, and Newfoundland and Labrador, and 12% in British Columbia. GST applies at the rate of 5% in the remaining provinces and territories.
All legislative references are to the Excise Tax Act (ETA) unless otherwise specified.
STATEMENT OF FACTS
* […]
* [The Corporation] is responsible for providing comprehensive health services in the […] and […] regions in […][Province 1] servicing [#] communities: […].
* […] is located in the town of […][City 1, Province 1]. It includes the […] located on the […] Indian reserve and the […] located on the […] reserve.
* […].
* […].
* [The Corporation] is registered as a charitable organization under the category “Hospitals” by the Charities directorate of the CRA as of [mm/dd/yyyy]. (BN# […])
* [The Corporation] was incorporated as a corporation without share capital in [yyyy].
* Head office of the corporation is located on the […] Indian reserve […].
* By-Law […], Membership states:
At all times the Directors described in Section 4.1(1)(a) through Section 4.1(1)(f) shall be members.
* By-Law […], Composition of the Board states:
The Board of Directors of the [the Corporation] is composed of [#] elected directors and [#] ex officio directors, including: […]
* By-Law […], Elected Directors states:
[…] At the first election of Directors following approval of this By-Law, [#] directors shall be elected for a [#]-year term, [#] Directors shall be elected for a [#]-year term, and [#] Directors shall be elected for a [#]-year term. Thereafter, newly elected Directors shall be elected for [#]-year terms.
* By-Law […], Responsibilities of the Board states:
[…] Approve the annual operating and capital budget and monitor financial performance periodically against the budget and agreed-upon indications.
* In your incoming letter you note that regular meetings of the Board of Directors are held on reserve land.
RULING REQUESTED
You would like to know if [the Corporation] qualifies as a band-empowered entity, as defined in B-039, thereby entitling it to claim GST/HST rebates as a band-empowered entity where the conditions described in B-039 are met.
RULING GIVEN
Based on the facts set out above, we rule that […] [the Corporation] qualifies as a band-empowered entity, as defined in B-039, provided that those who appoint or elect the majority of the members of the Board of Directors of [the Corporation] are the band, tribal council, group of bands or individual members of the band, tribal council or group of bands as described under the first criteria of the “controlled” test in B-039. As a band-empowered entity, [the Corporation] will be entitled to claim GST/HST rebates available to band-empowered entities where the conditions described in B-039 are met.
This ruling is subject to the qualifications in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service. We are bound by this ruling provided that none of the above issues are currently under audit, objection, or appeal, that no future changes to the ETA, regulations or our interpretative policy affect its validity, and all relevant facts and transactions have been fully disclosed.
EXPLANATION
In order to avail itself of GST/HST rebates provided under B-039 to band-empowered entities, [the Corporation] must be carrying out band management activities and all other conditions described in B-039 must be met. B-039 defines “band management activities”, in part, 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.
[The Corporation] as an incorporated band-empowered entity would be entitled to acquire property on a reserve relieved of the GST/HST where the property is for band management activities and appropriate documentation is provided to the vendor. Property acquired off a reserve that is not delivered to a reserve by the vendor or the vendor’s agent would not be relieved of the tax. Services, whether acquired on or off a reserve by [the Corporation], would be tax relieved (other than off-reserve purchases of transportation, short-term accommodation, meals and entertainment) 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.
The GST/HST paid by [the Corporation], its employees or officials on off-reserve purchases of transportation, short-term accommodation, meals and entertainment that constitute “eligible travel expenses” for purposes of B-039 would be recoverable by [the Corporation] under section 261 of the ETA through the use of GST 189, General Application for Rebate of the Goods and Services Tax (GST)/ Harmonized Sales Tax (HST). For example, if employees of [the Corporation] attended a conference off a reserve for band management activities and [the Corporation] reimbursed the employees for their travel expenses to attend the conference, [the Corporation] would be entitled to claim […][the GST/HST] of the reimbursement paid as a rebate using reason Code 8 on the GST189 form. With respect to the conference fee, [the Corporation] would be relieved from the payment of the GST/HST provided that [the Corporation] gives the conference supplier a certificate, as required under B-039.
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,
Cindy Christmas
Aboriginal Affairs and Educational Sectors Unit
Public Service Bodies and Governments Division
Excise and GST/HST Rulings Directorate
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