5 December 2006 GST/HST Ruling 85222 - Supplies of Various Medical Products Used in Surgery

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 enquiry concerning the requirements necessary for tax relief to apply to off-reserve purchases of property that are delivered to a reserve found in TIB B-039R3 GST/HST Administrative Policy - Application of the GST/HST to Indians (B-039R3).

Interpretation Requested

Your enquiry concerns a First Nations person that wants vendors to utilize the First Nations person's delivery service so that goods may be delivered to status Indians on a reserve relieved of tax. Some vendors have been reluctant to utilize the First Nations person's delivery service, as they are not sure that the arrangement will meet the delivery requirements set out in B-039R3.

Interpretation Given

The following guidelines have been developed that elaborate on what the Canada Revenue Agency (CRA) is prepared to accept in terms of a First Nations/First nation person operated delivery service. However, as indicated in your telephone conversation with a GST/HST Rulings officer XXXXX, an arrangement to act as a vendor's agent is a contractual matter between the vendor and the carrier. It is not within the CRA's authority to require a vendor to deliver goods to a reserve or to hire a delivery service (First Nation or otherwise).

First Nation Operated Delivery Service

B-039R3 provides tax relief to off-reserve purchases of property acquired by Indians, Indian bands and unincorporated band-empowered entities, as well as incorporated band-empowered entities purchasing for band management activities, provided:

•   They have the appropriate documentation to show the vendor; and

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

B-039R3 adds that an agent of the vendor includes an individual or company under contract to the vendor for making deliveries. Note: A carrier who is under contract with the purchaser is not regarded as an agent of the vendor. In addition, undertakings made by purchasers of property to deliver the property to themselves as agents of the vendor are not acceptable to the CRA.

Agent of the Vendor

B-039R3 does not preclude a delivery business being established by a First Nation or a First Nation individual. However, the arrangement to act as the vendor's agent is a contractual matter between the vendor and the carrier.

The requirements of a vendor's agent are no different for a First Nation operated delivery service from those of a non-First Nation operated delivery service. A delivery business established by a First Nation or a First Nation individual will qualify as an agent of the vendor where the following conditions are met:

•   Vendor must arrange for the delivery [cash on delivery (COD) is acceptable];

•   The carrier is under contract with the vendor for making the delivery to the reserve;

•   Carrier must be in the business of delivering goods;

•   If the delivery business is established from the First Nation Council, the delivery business will not be considered an agent of the vendor where the band is the purchaser unless the business is incorporated as a separate legal entity from the First Nation and Council; and

•   Invoice, sales receipt, waybill or other documentation respecting the sale of the goods must show the vendor as the originator of the delivery and a reserve address as the destination. The vendor must retain a copy of this documentation as proof of delivery to a reserve.

While it is understandable that a First Nation individual may wish to utilize a delivery service in order to obtain relief of tax, the CRA cannot impose a requirement on off-reserve vendors that all purchases must be delivered or that arrangements must be made for delivery of the goods 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 Memorandum 1.4, Goods and Services Tax Rulings.

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

2007/01/10 — RITS 85430 — Applicability of Interest and Penalties to Assessments