File No.: 11872-1
Dear XXXXX
Your letter of November 28, 1995, regarding air transportation services has been referred to my office by Mr. XXXXX from the XXXXX Tax Services Office. I have been asked to respond to you directly to clarify the Department's position on this matter.
As you have pointed out, an act of general application, such as the Excise Tax Act (ETA), must respect provisions of the Indian Act. The GST administrative policy pertaining to Indians was designed to respect the provisions of the Indian Act, which provides a tax exemption for "the personal property of an Indian or a band situated on a reserve".
The Indian Act exemption relates to Indians as consumers; it does not provide any exemption to the commercial activities of an Indian business that is supplying goods or services. The ownership of the business making the supply is not relevant; the provisions of the ETA that relate to businesses making supplies will apply to Indian owned businesses. Therefore, if GST is applicable on the supply, all businesses are required to charge, collect and remit the GST.
As you are aware, an individual Indian purchaser is entitled to acquire a transportation service without GST, if the origin and the destination of the transportation service are both on a reserve. Transportation services acquired on reserve by Indian bands and band-empowered entities are not subject to the GST, if the services are acquired for band management activities or for real property on reserve. Transportation services acquired off-reserve by a band or a band-empowered entity it will be subject to the GST. However, the band or entity will be eligible for a full rebate of the GST paid, if the services are acquired for band management activities or for real property on reserve.
I trust these comments will be helpful to you.
Yours truly,
J.A. Venne
Director
Special Sectors
GST Rulings and Interpretations
| c.c.: |
J. McInnis
XXXXX
XXXXX |
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