21 February 2000 GST/HST Interpretation 25848 - Application of the GST to Construction Services For Real Property Off Reserve

There are two issues to be determined. The first issue deals with whether the XXXXX qualifies as a band empowered entity. The second issue is whether the acquisition of construction services for real property off reserve qualifies for tax relief as set out in Technical Information Bulletin 039R (TIB039R). Other issues will be dealt with by the Technical Interpretation Services Centre office.

The XXXXX. The XXXXX has entered into agreements for the construction of a building that will house XXXXX[.] At this time, it is not clear to what extent the activities of the XXXXX within this building will be considered 'commercial activity', as defined in the Excise Tax Act. Although the XXXXX owns the land on which the building is being constructed, the land is not reserve land as defined by the Indian Act.

We have limited information about the current activities of the XXXXX. It has identified that XXXXX. However, the XXXXX is not registered for GST/HST.

We have been provided with an unsigned, undated, XXXXX document entitled XXXXX[.] This document provides that:

-    The head office of the XXXXX will be in the XXXXX[.]

-    The objectives of the XXXXX include XXXXX[.]

-    The XXXXX[.] A condition to membership is that the First Nation XXXXX[.] These members do not control the activities of the XXXXX[.]

-    A person shall automatically be eligible to be a Board Member (Board of Directors) to the XXXXX upon XXXXX. Each Board member or designate shall be entitled to one vote. The Board of Directors of the XXXXX may administer the affairs of the XXXXX in all things. XXXXX TIB039R provides that a "band-empowered entity" is a corporation, association, society, or other organization that is owned or controlled by a group of bands. An entity is considered to be owned by a group of bands if the group of bands holds all or substantially all of the memberships of the entity.

Assuming that the facts are as stated above, the XXXXX qualifies as a band empowered entity with a presence on reserve.

The second issue is whether the acquisition of construction services for real property off reserve qualifies for tax relief as set out in TIB039R.

TIB039R provides that services acquired on or off reserve by an Indian band or band empowered entity for band management activities or for real property on reserve are relieved of GST/HST.

However, the construction services are being acquired by the XXXXX for real property off reserve. As such, the acquisition of these construction services is excluded from the tax relief set out in TIB039R. The XXXXX must pay the tax charged on the acquisition of construction services.

However, XXXXX may be eligible for a rebate of XXXXX of the tax paid on the construction of the building. Also, depending on the extent of its commercial activity and its registration status, the XXXXX may be eligible to claim 100% of the tax paid or payable as input tax credits[.]

For purposes of the response to the client, I suggest including all the information starting with (page 1, fourth paragraph):

We have been provided with an unsigned, undated, XXXXX document entitled.

And ending with (page 2, paragraph 7):

The XXXXX must pay the tax charged on the acquisition of construction services.

If you require further information, I may be contacted at (613) 954-7954.