13 May 1997 GST/HST Interpretation HQR0000572 - The Application of the GST/HST to Purchases of Airline Tickets by an Indian Band From a Travel Agent on a Reserve.

Dear XXXXX

I am writing in response to your letter dated February 13, 1997 concerning the application of the GST/HST to purchases of airline tickets by an Indian band from a travel agent on a reserve.

Specifically, you have asked the following questions:

1) Can an Indian band purchase an airline ticket from a travel agent on reserve without the GST (or HST) applying?

2) If the answer to question #1 is yes, does the answer change if the band went to the agent on reserve but the travel agent had another agent not located on reserve print their tickets?

As you are aware, services acquired by an Indian band or band-empowered entity, either on or off reserve, for band management activities or for real property on reserve are not subject to the GST or HST.An exception is made for off-reserve purchases by Indian bands and band-empowered entities of transportation, short-term accommodation, meals and entertainment. For example, an Indian band or band-empowered entity will pay the GST or HST for off-reserve purchases of airline tickets (other than zero-rated flights). However, they are entitled to recover the GST or HST paid in respect of these transportation services if they are acquired for band management activities or for real property located on reserve.

If the band or band-empowered entity enters into an agreement with a travel agent on reserve to acquire a transportation service and pays consideration to that travel agent on reserve, then we will consider the transportation service to have been acquired on reserve. The travel agent on reserve may arrange to have the tickets printed by another travel agent located off reserve. However, if the band or band-empowered entity does not have an agreement with any party other than the travel agent on reserve and only makes payment to that agent, then we would still regard the transportation service as acquired on reserve. In this situation, we would consider that the travel agent off reserve is acting as an agent of the travel agent on reserve in printing the tickets on its behalf.

Alternatively, if the band or band-empowered entity enters into an agreement with a travel agent or airline carrier off reserve and makes payment off reserve, the transportation service will be regarded as acquired off reserve, even if the tickets are mailed to an address on reserve.

In order that the transportation service acquired on reserve will be relieved of GST or HST, the band or band-empowered entity must provide a certificate to the vendor at the time of the purchase attesting that the transportation service has been acquired by that entity for band management activities. A certificate is not required if the transportation service has been acquired in relation to real property located on reserve.

If the transportation service is not acquired on reserve, then GST or HST will apply to the consideration paid by the band or band-empowered entity. These entities will be entitled to recover the tax paid by filing a General Rebate application if the service has been acquired for band management activities or for real property located on reserve.

I hope that this information will be of assistance. If you would like to discuss this further, please contact me at (613) 954-7954.

Yours sincerely,

Elaine Bonnah
Policy Officer
Public Service Bodies and Governments
GST Rulings and Interpretations