12 August 2005 GST/HST Interpretation 56852 - Eligibility for input tax credit for GST paid on purchase of a truck

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.

Dear XXXXX:

Thank you for your letters XXXXX concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the XXXXX.

All legislative references are to the Excise Tax Act (ETA) and the regulations therein, unless otherwise specified.

The following information has been provided in your letters, from the web-sites of XXXXX and during our telephone conversations XXXXX:

•   XXXXX.

•   The XXXXX receives funding from the XXXXX.

•   The office of the XXXXX is not located on a reserve.

•   XXXXX.

•   The members of the XXXXX are elected and are responsible for their operating budget XXXXX.

•   For the year XXXXX a motion was passed by the XXXXX designating the office of XXXXX as the finance and administration unit in charge of budgets, accounting, supporting document retention, monthly financial statements, etc.

•   The XXXXX is incorporated under the Laws of Ontario as a corporation XXXXX.

•   The XXXXX is overseen by a Board of Directors representing the XXXXX.

•   The objective of the XXXXX.

•   The office of the XXXXX is not located on a reserve. XXXXX.

•   The XXXXX elects the directors of the XXXXX from the members of the XXXXX. The members of the XXXXX are individuals that are members of the XXXXX.

•   XXXXX owns all of the assets, e.g. office equipment, furniture, computers, printers, photocopiers, filing cabinets, etc.

•   XXXXX.

Interpretation Requested

You have asked the following questions:

1) Is the XXXXX a band-empowered entity and can that entity be deemed to be on a reserve even though it is does not have an office on a reserve;

2) Is the XXXXX eligible to acquire goods and services relieved of the GST; and

3) Are the chiefs eligible to file GST rebates on their home office expenses, and if not, is either XXXXX eligible to file a rebate of the GST paid by the chiefs to run their home offices?

4) You have also asked specifically whether XXXXX may claim a rebate or be relieved of paying tax on legal fees related to the work performed by XXXXX.

Interpretation Given

As insufficient information was provided we are unable to provide interpretations to the questions you asked. We are providing the following comments and information for your review.

Section 87 of the Indian Act (IA) provides tax relief to personal property of an Indian or band situated on a reserve. The Canada Revenue Agency's publication B-039R: Technical Information Bulletin B-039R, GST Administrative Policy - Application of GST to Indians (B-039R) (copy enclosed) describes the relief that is available to Indians and bands for GST/HST purposes.

An Indian, as defined in the IA, is a person who pursuant to the IA is registered as an Indian or is entitled to be registered as an Indian. Indians are entitled to section 87 IA relief. Tax relief is not available to individuals who do not qualify as Indians under the IA.

"Band", for purposes of B-039R, has the same meaning as defined in the IA and also includes a band council and a tribal council. "Indian" for purposes of B-039R means a person who is registered under the IA. B-039R applies to Indians, bands, and to band-empowered entities.

"Band-empowered entity" is defined in B-039R to be a corporation, board, council, association, society, or other organization that is owned or controlled by a band, a tribal council, or a group of bands other than a tribal council. A tribal council is a grouping of bands. In order to qualify for tax relief under B-039R, a band-empowered entity must maintain a presence on a reserve.

In order for an entity to qualify as a band-empowered entity, it must be owned or controlled by a band, a tribal council or a group of bands. The information necessary to establish whether any of the persons making up the XXXXX is a band was not provided. As a result, we cannot make a determination as to whether XXXXX is owned or controlled by a group of bands.

In addition, we are unable to determine whether the XXXXX is a tribal council as we have not been provided sufficient information on the persons forming the XXXXX. In identifying bands and tribal councils, the CRA relies on a list created by Indian and Northern Affairs Canada (INAC) that contains the names of bands and tribal councils recognized by that Department. The entities that you identified as bands are not on the list of bands produced by INAC, nor is the XXXXX on the list of tribal councils produced by INAC. We will be pleased to re-evaluate your request should you be able to demonstrate that the entities are bands recognized by INAC or that XXXXX is a tribal council recognized by XXXXX.

However, there is a rebate provided under the ETA of which you should be aware. A non-profit organization that receives at least 40% of its annual revenues in the form of "government funding" is regarded as a "qualifying non-profit organization" as defined in subsection 259(2) of the ETA. Where an entity is a "qualifying non-profit organization" it would be eligible for a rebate of 50% of its non-creditable tax charged as per subsection 259(3) of the ETA. If the XXXXX is a qualifying non-profit organization, then a GST/HST rebate would be available on the expenses related to operating the respective entity. For further information on this rebate please refer to the enclosed publication, GST/HST Public Service Bodies' Rebate Guide. The applicable forms necessary to file this rebate have been enclosed.

The foregoing comments represent our general views with respect to the subject matter of your letter. Proposed amendments to the ETA, if enacted, could have an effect on the interpretation provided herein. These comments are not rulings and, in accordance with the guidelines set out in section 1.4 of Chapter 1 of the GST/HST Memoranda Series, do not bind the Canada Revenue Agency with respect to a particular situation.

For your convenience, find enclosed a copy of section 1.4 of Chapter 1 of the GST/HST Memoranda Series - Goods and Services Tax Rulings; Technical Information Bulletin B-039R, GST Administrative Policy - Application of GST to Indians; and a GST/HST guide: GST/HST Public Service Bodies' Rebate, including applicable forms.

Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at 613-954-7954.

Yours truly,

K. Chesterman
Aboriginal Affairs Unit
Public Service Bodies and Governments Division
Excise and GST/HST Rulings Directorate

2005/06/30 — RITS 57840 — Supplies to Partnership