11 August 2004 GST/HST Ruling 52005 - Supply of Recreational Vehicles on Behalf of Other Persons

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.

This is further to my XXXXX e-mail to you regarding the subject matter. While the questions you posed in your XXXXX e-mail have been responded to XXXXX.

I have taken the liberty of restating your questions and the responses I had previously given. A further explanation of the position taken is also provided. Words in square brackets have been added for clarification purposes only.

Question:

1) Is an Indian band or band-empowered entity entitled to a Code 8 rebate on a reimbursement paid to a band official for the rental of a car while on travel status off reserve for band management activities?

Response:

1) An eligible travel expense includes the rental of an automobile by a band official while on travel status [off reserve] for band management activities. As such, an Indian band or a band-empowered entity (BEE) is entitled to recover, through the rebate mechanism (Code 8), the GST/HST included in an amount reimbursed to a band official for this purpose.

Explanation:

The decision to treat the rental of an automobile as an eligible travel expense was confirmed in the response to an enquiry received from the XXXXX TSO XXXXX. The following paragraphs are an excerpt from the rationale provided in that case.

The decision to treat the rental of an automobile as a transportation service for purposes of B-039R was based on the idea that band officials and employees commonly incur this type of expense in their performance of the duties of the office or employment. It also ensures that all modes of transportation (e.g., air, bus, train, taxi) acquired by Indian bands and BEEs for band management activities off reserve are afforded equal treatment.

In order to provide tax relief on the rental of an automobile as an eligible travel expense under B-039R, it was necessary to treat its acquisition as that of a transportation service. As in the case of other transportation services acquired off reserve, an Indian band or BEE would be required to pay GST/HST on the off-reserve rental of an automobile. The Indian band or BEE would then be entitled to recover the GST/HST paid on its rental through claiming a Code 8 rebate provided that the rental of the automobile was for band management activities and all other conditions set out in B-039R are met. This view was adopted despite the fact that for purposes of the ETA, section 136(1) of the ETA deems a supply by way of lease, licence or similar arrangement (i.e., the rental of an automobile) to be a supply of tangible personal property.

Question:

2) Is an Indian band or BEE entitled to a Code 8 rebate on a reimbursement paid to a band official for the purchase of gasoline for a car rented while on travel status off reserve for band management activities?

Response:

2) The supply of gasoline/fuel is a supply of tangible personal property. An Indian band or BEE is not entitled to recover, through the rebate mechanism, the GST/HST included in an amount reimbursed to a band official for this purpose. B-039R requires property of an Indian, Indian band or BEE to be acquired on reserve or delivered to a reserve for tax relief to apply. An Indian band or BEE may be entitled to a rebate under section 259 of the ETA for a portion of the GST/HST paid on the acquisition of property off reserve by a band official on travel status for band management activities if it is a selected public service body (e.g., [a hospital authority) or] a [qualifying] non-profit organization.

A reasonable travel allowance (i.e., a payment of [a reasonable amount of] money to cover transportation, short-term accommodation, meals and[/or] entertainment) paid to a band official/employee by an Indian band or BEE is simply a payment of money to cover certain expenses that might be incurred by a band official while on travel status off reserve for band management activities. An Indian band or BEE is entitled to claim a Code 8 rebate at the time the allowance is paid to the band official. How the allowance is or will be spent has no bearing on an Indian band or BEE's entitlement to claim a rebate in respect to a travel allowance paid to a band official. Therefore, a reasonable vehicle allowance or a per km allowance given by an Indian band or BEE to a band official that is used, in part, to buy gasoline while on travel status for band management activities off reserve will not affect the Indian band or BEE's entitlement to claim a Code 8 rebate in respect of the allowance given. [Where a travel allowance is paid to a band official for on-reserve travel only, an Indian band or BEE would not be entitled to a Code 8 rebate.]

Explanation

The provision of tax relief on gasoline - tangible personal property - that is not delivered to a reserve would extend tax relief beyond the original intent of B-039R. If tax relief was provided to an Indian band or BEE on reimbursement to a band official for the cost of tangible personal property acquired off reserve while on travel status, there is concern that this could be interpreted to mean that other tangible personal property (e.g., vehicle parts) acquired in the same circumstances would also be tax relieved. For this reason, an Indian band or BEE is not entitled to claim a Code 8 rebate in respect of a reimbursement paid to a band official for the purchase of gasoline while on travel status off reserve.

Question:

3) Is an Indian band or BEE entitled to a Code 8 rebate for a reimbursement paid to a band official for parking costs incurred while on travel status off reserve for band management activities?

Response:

3) The supply of a parking space is a supply of real property under the ETA. However, parking may be provided as either part of a single supply of short-term accommodation or as a separate supply. Where a separate supply of a parking space is provided to a band official to park an automobile while on travel status off reserve for band management activities, the supply will be viewed like a transportation service for purposes of B-039R. Therefore, the supply of a parking space in this situation will be considered an eligible travel expense for purposes of B-039R and the Indian band or BEE will be entitled to claim a Code 8 rebate in respect of an amount reimbursed to the band official on this eligible travel expense.

Explanation:

As an Indian band or BEE is entitled to claim a Code 8 rebate on the off-reserve purchase of a single supply of short-term accommodation that includes parking, it seems reasonable to extend the same tax relief on a separate supply of parking where the supply is acquired by a band official/employee on travel status off reserve for band management activities.

Question:

4) Is an Indian band or BEE entitled to a Code 8 rebate on the reimbursement paid to a band official that decides to camp out rather than stay in a motel?

Response:

4) The supply of a campsite is a supply of real property under the ETA. Where a band official/employee on travel status [off reserve] for band management activities decides to camp out rather than stay in a motel, the supply will be treated as "short-term accommodation" for purposes of B-039R. Therefore, an Indian band or BEE will be entitled to claim a Code 8 rebate with respect to an amount reimbursed to the band official on this eligible travel expense.

Explanation:

For purposes of B-039R, the supply of short-term accommodation - real property - is treated as a service. It seems reasonable to afford the same treatment to other supplies of real property that are of the same duration (i.e., short-term) and of the same nature.

Please call me at (613) 954-7952 if you would like to discuss further.

2004/08/03 — RITS 52333 — Application of GST/HST to Delivery Charges