3 May 2005 GST/HST Ruling 59996 - Park Lot Lease & Development Fees

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 letter XXXXX concerning the application of the Goods and Services Tax (GST) to a vehicle purchased by an Indian individual from an automotive dealership located off a reserve where the delivery of the vehicle will be made to a reserve.

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

We understand that an Indian customer who does not reside on a reserve wishes to purchase a vehicle from your automotive dealership. The Indian customer does not wish to pay the GST and has requested that the dealership deliver the vehicle to a location on a reserve.

Interpretation Requested

What are the rules and delivery requirements for tax relief to apply where an off-reserve vendor sells a vehicle to an Indian that is not a resident of the reserve?

Interpretation Given

B-039R GST Administrative Policy Application of GST to Indians (B-039R) summarizes the policy concerning the treatment of purchases by Indians under the GST. It also contains provisions for Indian bands and band-empowered entities. A copy of B-039R may be viewed at www.cra-arc.gc.ca.

The treatment of purchases by Indians under the GST is consistent with the Indian Act under which personal property of an Indian or an Indian band situated on a reserve is not subject to tax.

Property acquired off a reserve

B-039R allows for the acquisition of property off a reserve without paying the GST, provided:

•   the Indian customer shows the appropriate documentation to the vendor; and

•   the property is delivered to a reserve by the vendor or the vendor's agent.

In regard to the first condition, the vendor must keep adequate evidence that a sale was made to an Indian, as registered under the Indian Act. The CRA will accept as evidence a notation on the invoice or other sales document, which is retained by the vendor, of the nine or ten digit registry number, or the band name and family number taken from the Certificate of Indian Status identification card issued by the Indian and Northern Affairs Canada.

Along with the individual's Certificate of Indian Status card number, the vendor is required to maintain proof of delivery indicating the destination of the property to a reserve.

Delivery by Vendor

There are no specific documentary requirements with respect to proof of delivery of a vehicle, as it is a question of fact. However, an indication on the invoice of the dealer and certain internal documentation will normally be acceptable proof of delivery of a vehicle by a vendor to a reserve. Where the vehicle is delivered by the vendor, the acceptable evidence may include the driver's log information, estimate of distance travelled, delivery destination and signature of the Indian purchaser attesting receipt of the vehicle on the reserve, as well as expense reports (e.g. fuel purchases) or disbursement records relating to the delivery.

Vendor's agent

Where the vehicle is delivered by the vendor's agent to a reserve, the vendor, in addition to the proof of Indian status, must also retain proof of delivery to the reserve by the vendor's agent (e.g., a waybill showing a reserve address and signature of the Indian accepting delivery on a reserve).

An agent of the dealer includes an individual or company under contract to the dealer for making deliveries. The dealer would normally bear all the risks of the agent during the course of the delivery as if these risks were the dealer's own, unless specifically covered in the agency agreement.

Note: There is no requirement that individuals reside on a reserve in order to qualify for tax relief. They are still, however, required to have the vehicle delivered to a reserve by the vendor or the vendor's agent. Normal GST rules will apply where an Indian purchases a vehicle and takes possession of the property off a reserve and arranges for their own delivery to a reserve.

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, Goods and Services Tax Rulings, 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.

For your convenience, find enclosed a copy of GST/HST Memoranda 1.4, Goods and Services Tax Rulings and B-039R GST Administrative Policy Application of GST to Indians.

If you require clarification with respect to any of the issues discussed in this letter, please call me directly at (613) 952-9264.

Yours truly,

Cindy Christmas
Aboriginal Affairs Unit
Public Service Bodies and Governments Division
Excise and GST/HST Rulings Directorate

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