Please note that the following document, although correct at the time of issue, may not represent the current position of the Agency. / Veuillez prendre note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'Agence.
Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 15th floor
320 Queen Street
Ottawa ON K1A 0L5
XXXXX
XXXXX
XXXXX
Case Number: 110023
Attention: XXXXX
March 2, 2009
Subject:
GST/HST INTERPRETATION
Transportation services provided to Indians and Indian bands
Dear XXXXX:
Thank you for your letter of XXXXX, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to transportation services provided to Indians and Indian Bands.
All legislative references are to the Excise Tax Act (ETA) unless otherwise specified.
We understand that you are requesting information about the tax status of transportation services supplied by a XXXXX partnership to Indians and Indian bands.
The following facts were provided in your letter:
• The partnership is registered for purposes of the GST/HST.
• The partnership operates a XXXXX delivery service on a XXXXX.
• The head office is XXXXX located on a reserve as defined in the Indian Act.
• Orders are taken at the head office.
• The customers are Indians who hold the Certificate of Indian status card, non-status Indians, Indian bands as well as band-empowered entities.
• Goods are picked up at various off-reserve locations and are delivered to various locations XXXXX on a reserve.
• The partnership keeps records that distinguish the income generated from transportation services provided to status Indians and Indian bands located on a reserve from that generated from services provided to off-reserve customers.
In addition, you requested a ruling for income tax purposes on the income earned by the individual partners. Your request has been forwarded to the Income Tax Rulings Directorate and a separate letter will be issued by them in relation to that request.
Interpretation Requested
You would like to know if the partnership is required to collect GST on supplies of transportation services made to its Indian customers.
Interpretation Given
GST/HST Technical Information Bulletin B-039R, GST/HST Administrative Policy - Application of GST/HST to Indians (B-039R) iFootnote 1 describes the CRA's administrative policy respecting the tax treatment of purchases by Indians, Indian bands and band-empowered entities.
The CRA's administrative guidelines are fully consistent with the relieving provisions of section 87 of the Indian Act affecting the personal property of an Indian situated on a reserve. In addition, the guidelines reflect governmental tax policy by extending relief to other supplies such as services acquired by Indians that meet the conditions of B-039R.
The following interpretation is based on the assumption that the partnership is not making supplies of freight transportation services as defined in Part VII of Schedule VI to the ETA that are zero-rated under that Part. In other words, this interpretation only applies to transportation services that are normally subject to GST/HST at the rate of 5% for GST or 13% for HST. The enclosed guide RC4080 GST/HST Information for Freight Carriers iiFootnote 2 provides information on zero rated freight transportation services.
Individual Indians
GST/HST will apply to a transportation service made to a status Indian unless the origin and the destination are on a reserve. Therefore, where goods are picked up from various locations off-reserve and delivered to various locations XXXXX on a reserve, GST/HST will apply as the origin is not on a reserve. Generally a service must be totally performed on a reserve to qualify for tax relief.
A supply of a transportation service made to a non-status Indian does not qualify under B-039R for tax relief and is subject to the normal GST/HST rules regardless of the place of origin or destination.
Indian bands and band-empowered entities
In general, services acquired on or off a reserve by an Indian band or band-empowered entity for band management activities or for real property on a reserve are not subject to the GST/HST.
A band or band-empowered entity may acquire a transportation service on a reserve relieved of GST/HST provided that the service is acquired for band management activities or for real property on a reserve. For tax relief to apply when the service is paid for, the transportation service need not take place on a reserve, but it must be acquired on a reserve. The CRA's position is that the service is considered to be acquired on a reserve if the supplier is located on a reserve. However, a transportation service, acquired off-reserve by a band or band-empowered entity will be subject to the GST/HST. The band or band-empowered entity will be eligible for a rebate of the GST/HST paid if the service is acquired for band management activities.
Band management activities are 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. For further information on what constitutes band management activities, refer to the copy of B-039R that has been enclosed for your reference.
All services acquired by an Indian band or band-empowered entity that are not acquired for band management activities or for real property on a reserve are subject to GST/HST regardless of whether the service is acquired on or off a reserve. That is, services acquired in the course of commercial activities are not relieved of GST/HST. However, if an Indian band or band-empowered entity is a registrant for GST/HST purposes, it would be eligible to claim an input tax credit to recover the GST/HST paid on purchases of goods and services consumed, used or supplied in the course of its commercial activities where all the legislative requirements are met.
Documentation requirements
A vendor will be required to obtain certification from the Indian band or band-empowered entity that the service is for band-management activities or for real property on a reserve. A sample of what should be included in the certification is provided in B-039R.
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,
Cindy Christmas
Aboriginal Affairs Unit
Public Service Bodies and Governments Division
Excise and GST/HST Rulings Directorate
i 1. Technical information Bulletin B-039R is available on the Internet at this address: www.cra.gc.ca/gsthstpub
ii 2. RC4080 GST/HST Information for Freight Carriers is also available at the above noted address.
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