20 October 2005 Excise Interpretation 58003 - Follow-up – Request for Additional Information

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:

This letter is a follow-up to my previous correspondence to you of August 16, 2005, where we requested additional information from you in response to your letter received by the Canada Revenue Agency (the "CRA") XXXXX and your recent letter XXXXX concerning the Part I tax on insurance premiums.

In order to determine whether or not the insurance premiums you paid are subject to the 10% tax under Part I of the Excise Tax Act (ETA), we requested certain information from you. We have not heard back from you, nor have we received the requested information. As such, I thought I would follow-up with you on the matter.

Background Information

We understand that you paid insurance premiums for the calendar year ending XXXXX with respect to a XXXXX insurance policy XXXXX through a broker in Canada XXXXX.

XXXXX advised the CRA that the insurer that provided the insurance to you was not authorized under the laws of Canada or, of any province, to transact the business of insurance.

On March 29, 2005, the CRA mailed you a return, and requested that you sign and send back the return to the address identified on the form. On July 7, 2005, the CRA once again issued you a letter, requesting that you file an excise tax return for the XXXXX taxation year.

In your earlier letter to us, you indicated that you were of the view that there should have been no tax payable with respect to the insurance you obtained since you are a status Indian living on a reserve XXXXX.

General Comments

Subsection 87(1) of the Indian Act provides that, notwithstanding any other Act of Parliament or any Act of the legislature of a province, but subject to section 83 of the Indian Act, the following property is exempt from taxation, namely:

(a) the interest of an Indian or a band in reserve lands or surrendered lands; and

(b) the personal property of an Indian or a band situated on a reserve.

Subsection 87(2) of the Indian Act provides that no Indian or band is subject to taxation in respect of the ownership, occupation, possession or use of any property mentioned in paragraph 87(1)(a) or (b) of the Indian Act or is otherwise subject to taxation in respect of any such property.

REQUEST FOR INFORMATION

In order for the CRA to determine whether or not the insurance premiums you paid are in fact subject to the 10% tax under Part I of the ETA, we request the following additional information:

•   What percentage of your work (that related to the insurance contract purchased) was performed on the reserve? For example, for purposes of making such a determination, you may look at things such as where the actual XXXXX or meetings with clients took place. If the XXXXX or meetings took place at a location off a reserve, that work would not be considered to be "performed on a reserve".

•   Were there any restrictions within the insurance policy that provided that you were only covered under the policy with respect to work carried out while on the reserve?

•   What percentage of your clients resided on a reserve?

•   Where did the work performed for your clients take place (i.e., on or off a reserve)?

•   Please provide us with the name and the address of the insurer that provided you with the XXXXX insurance.

•   Where did meetings (if any) take place between yourself and your clients?

•   Please describe the nature, location and surrounding circumstances of your work performed as a XXXXX, including any benefit that accrued to the reserve from it.

•   Please describe in further detail the type of XXXXX services that were provided (e.g., meeting face-to-face with clients, followed up with additional analysis provided in the form of a written report).

If you require clarification with respect to any of the issues discussed in this letter, please call me directly at (613) 941-2348.

Yours truly,

Douglas Wood, CGA
Rulings Officer
Other Levies Unit
Excise Duties and Taxes Division
Excise and GST/HST Rulings Directorate

2006/01/23 — RITS 60821 — Air Travellers Security Charge Interpretation