30 June 2005 GST/HST Interpretation 60577 - Books sold with CD-ROMs

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 in response to your verbal request XXXXX for information with respect to when property of an Indian or Indian band (band) is situated on a reserve. More specifically, your question is as follows: does property meet the delivery requirement when it is transported onto a reserve by the vendor or vendor's agent and is immediately transported off the reserve by the vendor or the vendor's agent to another location that is not on a reserve?

Under Technical Information Bulletin B-039R, GST Administrative Policy - Application of GST to Indians (B-039R), property may be acquired by Indians, bands or unincorporated band-empowered entities (BEEs) without the payment of GST/HST provided the property is located on a reserve or delivered to a reserve by the vendor or the vendor's agent. An incorporated BEE may also acquire property on or delivered to a reserve relieved of tax when for band management activities where the remaining conditions of B-039R have been met.

Please note that the following applies to tangible personal property of an Indian, band or BEE when making a determination with respect to delivery of property to a reserve and whether tax relief can be given.

Delivery to a reserve

The GST administrative policy pertaining to Indians, bands and BEEs provides that goods supplied off a reserve will not be subject to the GST when they are delivered to a reserve by the vendor or the vendor's agent providing the vendor maintains proof of delivery to a reserve.

Where property is delivered to a reserve in the vendor's own vehicle, the vendor must maintain proof that delivery was made to a reserve. This should be indicated on the vendor's invoice and internal records, (e.g. mileage log, dispatch records). Such proof must be maintained in addition to the proof of Indian status or certification by a band or BEE.

Where the property is delivered by the vendor's agent to a reserve, the vendor must maintain proof of Indian status or certification by the band or band-empowered entity, and proof of delivery being made to the reserve (e.g. waybill, postal receipt showing a reserve address).

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, band or BEE who is the purchaser takes possession of the property off a reserve and delivers the property to a reserve in his or her own vehicle.

It is the CRA's position that where the property is relieved of GST, the delivery charges will be relieved of GST even if separately billed provided the conditions of B-039R are met (e.g. adequate documentation must be retained by the vendor).

In order for tax relief to be available the property must be that of an Indian, band or BEE and be situated on a reserve. Therefore, where property is delivered to a reserve, the Indian, band or BEE 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 to the 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 off a reserve?;

•   Is there a separate delivery charge for delivery of the property to the off-reserve location?

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 taxable when acquired by an Indian as both the origin and destination do not occur on a reserve. A band or BEE can acquire 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.

Should you have any other questions or wish to discuss the matter further, please contact me at 613-954-7954.

2005/06/08 — RITS 61104 — GST Status of Movie Packages