19 January 2005 General Information Letter 56234 - GENERAL INFORMATION LETTER Consignment of Goods

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 XXXXX.

Question:

You requested general information with respect to Code 1 and Code 8 rebates and more specifically you enquired as to whether an Indian band is entitled to a Code 1 or a Code 8 rebate on gasoline. You indicated that the gasoline is being used XXXXX. However, it is not known where the gasoline is being purchased, i.e. on or off a reserve, or who is actually paying for it, but a band is trying to claim a rebate of tax paid on the gasoline. You also asked whether gasoline is tangible personal property or whether it would be considered a transportation expense for purposes of B-039R: GST Administrative Policy - Application of GST to Indians (B-039R).

General information covering various scenarios is provided below.

Response:

Code 8

Normally, services acquired off a reserve by an Indian band or band-empowered entity for band management activities or for real property on reserve are relieved of GST/HST at the time they are acquired. However, there is an exception made for off-reserve purchases of transportation, short-term accommodation, meals and entertainment (which will be referred to as "eligible travel expenses"). A General Rebate application may be filed using Code 8 as the reason for claiming a rebate of tax paid on eligible travel expenses incurred by an Indian band or band-empowered entity. Although the eligible travel expenses are not all services as per the Excise Tax Act, under B-039R we consider them to be services for Code 8 rebate purposes.

Note:

Individual Indians are not eligible to apply for a rebate under reason Code 8.

Also, there is no rebate available under reason Code 8 where the tax paid was not GST/HST (i.e. tax was imposed by a First Nation - FNT or FNGST).

Reimbursements

A Code 8 rebate is available to an Indian band or band-empowered entity in carrying out band management activities where it reimburses its employees or officials for "eligible travel expenses" incurred on its behalf. However, a reimbursement paid to a band member for transportation services to attend a personal medical appointment does not qualify for the Code 8 rebate of GST/HST as the band member is not traveling in the capacity as a band official or employee and the band has not acquired the supply.

Gasoline/fuel

The supply of gasoline/fuel is a supply of tangible personal property. One of the requirements under B-039R is that the Indian band or band-empowered entity acquires the property on a reserve or that the vendor or its agent delivers the property to a reserve for tax relief to apply.

An Indian band or band-empowered entity is not entitled to claim a Code 8 rebate of the GST/HST included in an amount paid on gasoline/fuel purchased off reserve (i.e. it is not an eligible travel expense under B-039R). Also, an Indian band or band-empowered entity is not entitled to a Code 8 rebate on an amount reimbursed to a band official for the purchase of gasoline/fuel.

Allowances

A reasonable travel allowance (i.e. a payment of money to cover expenses such as transportation, short-term accommodation, meals and entertainment) paid to a band official/employee by an Indian band or band-empowered entity is simply a payment of money to cover certain expenses that might be incurred on behalf of the band or band-empowered entity while on travel status off a reserve for band management activities. An Indian band or band-empowered entity is entitled to claim a Code 8 rebate at the time the allowance is paid to the band official/employee. If provided for eligible travel expenses, the allowance is unaccountable in the hands of the band official/employee. Consequently, how the band official/employee spends the allowance has no bearing on the Indian band or band-empowered entity's entitlement to claim a rebate.

A reasonable vehicle allowance or a per km allowance given by an Indian band or band-empowered entity to a band official/employee that is used, in part, to buy gasoline/fuel while on travel status for band management activities off a reserve will not affect the Indian band or band-empowered entity's entitlement to claim a Code 8 rebate in respect of the allowance given. Therefore, an allowance for vehicle expenses paid to a band official while on band business currently qualifies under reason Code 8.

An allowance paid to a band member for travel costs to attend a personal medical appointment does not qualify for the Code 8 rebate of GST/HST as the band member is not traveling in the capacity as a band official or employee and the band has not acquired the supply.

Code 1

Where an Indian, Indian band or band-empowered entity purchased gasoline on a reserve or had it delivered to the reserve by the vendor or vendor's agent, a Code 1 rebate will be available in the case where GST/HST has been paid in error, provided that no tax refund, credit or adjustment has been made by the vendor, and, in the case of an incorporated band-empowered entity, the gasoline was acquired for band management activities.

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

2005/01/28 — RITS 6991 — Supply of Recreational Vehicles on Behalf of Private Owners