GST/HST Rulings and Interpretations
Directorate
Place Vanier, Tower C, 10th Floor
25 McArthur Avenue
Vanier, Ontario
XXXXX K1A 0L5
XXXXX
XXXXX Case: HQR0000047
XXXXX June 8, 1998
Dear XXXXX
Thank you for your letter of June 17, 1996 (with attachments) concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the purchase of postage stamps by an Indian on a reserve. We apologize for the unavoidable delay in responding.
Interpretation Requested
You have requested the following:
1. That Revenue Canada review its administrative position regarding the application of GST to the purchase of postage stamps by an Indian on a reserve;
2. Written confirmation of Revenue Canada's current administrative position regarding the application of GST to the purchase of postage stamps by an Indian on a reserve.
Interpretation Given
As requested in your correspondence, we have revisited our administrative position relating to the application of the GST to postage stamps sold on a reserve. However, our opinion remains that under the Excise Tax Act, (hereinafter "the Act"), the sale of postage stamps is considered a freight transportation service, as opposed to the sale of a good. As you are aware, freight transportation services are subject to GST unless they are otherwise zero-rated pursuant to Part VII of Schedule VI to the Act.
As noted in your letter, section 87 of the Indian Act exempts from taxation "personal property of an Indian or a band situated on a reserve". The exemption from taxation reflects the unique constitutional and historic place of aboriginal peoples in Canada. The Supreme Court of Canada has held that the Indian Act tax exemption is based on the Government of Canada's obligation to preserve the entitlement of Indian people to their reserve lands and the need to ensure that the use of Indian property not be eroded through taxation.
Revenue Canada respects this obligation, and has accordingly adopted administrative guidelines designed to provide relief from taxation that is guaranteed under the Indian Act. These guidelines are detailed in the Technical Interpretation Bulletin 039R issued by Revenue Canada on November 25, 1993, entitled "GST Administrative Policy Application of GST to Indians" (hereinafter "TIB-039R"). Please note that while TIB-039R only makes reference to the GST, it also applies to the supply of goods and services in the participating provinces, to which the Harmonized Sales Tax applies.
Specifically, the purchase of postage stamps by an individual Indian will be relieved of taxation where both the origin and the destination are on a reserve. As acknowledged in your correspondence to us, this means that the postage stamps must be:
(1) purchased on a reserve;
(2) posted on a reserve; and
(3) delivered to a reserve.
In addition, all other conditions outlined in Revenue Canada's TIB-039R must be met.
Revenue Canada is of the view that this approach is consistent with the exemption provided by section 87 of the Indian Act and with Indian rights as recognized by law.
We trust that the above addresses your questions and concerns. However, should you require further clarification, please do not hesitate to contact me at 952-4157.
Yours truly,
Kristine Allen
Public Service Bodies and Governments Unit
GST/HST Rulings and Interpretations Directorate
c.c.:
Encl.:
Legislative References: TIB B-039R
NCS Subject Code(s): I 11872-1
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