30 July 2002 GST/HST Interpretation 41602 - Application of GST Where Sale Occurs on Reserve

Dear XXXXX:

Thank you for your letter of XXXXX concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the sale of XXXXX on reserve land.

Interpretation Requested

XXXXX. The business is located on XXXXX XXXXX Indian band reserve. Contractors building houses on the reserve have questioned whether they should be charged GST as they are not required to charge Provincial Sales Tax (PST) or GST/HST to their Indian customers. You had enquired with the PST department who advised you your supply would be considered exempt for provincial tax purposes. You therefore, wish to confirm that the GST would also be considered exempt where a non-Indian contractor purchases XXXXX for use and consumption on reserve.

Interpretation Given

TIB B-039R GST Administrative Policy - Application of GST to Indians (TIB B-039R) provides tax relief for purchases by Indians, Indian bands and band-empowered entities. The purchase however, by a non-Indian contractor as noted in the TIB B-039R is still subject to the normal GST/HST rules.

Where an Indian customer is entitled to tax relief when acquiring construction services on reserve, the contractor if registered for GST/HST purposes may recover the tax paid on materials by claiming any eligible input tax credits (ITCs).

Where a contractor is an Indian who operates as a sole proprietor, TIB B-039R provides tax relief on the contractor's purchase of goods on reserve. If however, the Indian contractor has an incorporated business, goods purchased are subject to tax as a corporation is considered to be a separate legal person from an Indian.

The foregoing comments represent our general views with respect to the subject matter of your letter. Proposed amendments to the Excise Tax Act, if enacted, could have an effect on the interpretation provided herein. These comments are not rulings and, in accordance with the guidelines set out in section 1.4 of Chapter 1 of the GST/HST Memoranda Series, do not bind the Canada Customs and Revenue Agency with respect to a particular situation.

For your convenience, find enclosed a copy of section 1.4 of Chapter 1 of the GST/HST Memoranda Series.

Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at (613) 952-9264.

Yours truly,

Cindy Christmas
Aboriginal Affairs Unit
Public Service Bodies & Government Division
Excise and GST/HST Rulings Directorate

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