XXXXXBrent Fleming
Governments Unit
Public Service Bodies and Governments Division
Excise and GST/HST Rulings Directorate
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February 6, 200133228
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Subject:
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Native Taxation - Self Employed Services Provided Off Reserve
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This is in response to your letter dated May 18, 2000, a copy of which was forwarded by Roberta Albert of the Income Tax Rulings Directorate. We were asked to respond directly to your office concerning the Goods and Services Tax/Harmonized Sales Tax (GST/HST) issues outlined in your letter. In particular, you requested:
1. Confirmation that the payments made to these status Indians for services provided off the reserve will not be excluded from taxation under the provision 81(1)(a) of the Income Tax Act and that the services are a taxable supply. XXXXX.
XXXXX[.] The following is our understanding of the facts:
XXXXX[.] Section XXXXX of the contract states that "This is a contract for the performance of a service and the Contractor is engaged under the contract as an independent contractor for the sole purpose of providing a service. Neither the Contractor nor any of the Contractor's personnel is engaged by the contract as an employee XXXXX[.]
Comments
Pursuant to subsection 165(1) of the Excise Tax Act (ETA) every recipient of a taxable supply made in Canada shall pay to Her Majesty in right of Canada tax in respect of the supply. A "taxable supply" is defined in subsection 123(1) to mean a supply made in the course of a "commercial activity" where a "commercial activity" is defined to include "a business carried on by the person (other than a business carried on without a reasonable expectation of profit by an individual ...) except to the extent to which the business involves the making of exempt supplies by the person." A "supply" is defined to be the provision of property or a service in any manner, including sale, transfer, barter, exchange, licence, rental, lease, gift or disposition."
Based on the above definitions, the provision of services by XXXXX would be a "taxable supply". Technical Information Bulletin B-039R, GST Administrative Policy Application of GST to Indians, sets out that Indians who are providing supplies of property or services are treated like other businesses, where they exceed the small supplier threshold, as set out in section 148 of the ETA, they are required to register for the GST/HST. As the consideration received by XXXXX exceeds the small supplier threshold, they are required to register and to collect tax on their supplies. XXXXX[.] If you have any further questions or concerns please call me at (613) 952-0370.
Legislative References: |
165(1), 221(1), 225(1), 123(1) |
NCS Subject Code(s): |
R-11878-1, 11872-5 |