28 June 2002 GST/HST Interpretation 40496 - Application of GST/HST to an Estate of an Indian Individual

This memorandum is in response to your query concerning the application of GST/HST to a testamentary trust (estate) of an Indian individual.

Your general scenario can be described as follows.

An accountant manages the estate of a deceased Indian individual. The main asset of the estate is a trailer park located on reserve. There are XXXXX sites, all of which are used for long-term residential use (for the sake of clarity, we assume here that the supplies are GST/HST exempt). Neither the individual nor the estate is a registrant.

As well, again for the sake of clarity, we will say that the accountant works from offices both on and off reserve.

Interpretation Requested

You ask, should the accountant be charging GST/HST on his fees for:

1) managing the trailer park?; and/or

2) administering the estate?

Interpretation Given

1) The accountant should charge GST/HST on his fees for managing the trailer park.

2) The accountant should charge GST/HST on his fees for administering the estate.

Explanation

A trust is not an Indian. This position is consistent with jurisprudence and with the treatment of trusts for income tax purposes. Consequently, it is not itself exempt from taxation pursuant to section 87 of the Indian Act.

As a result, supplies of property and/or services provided on or off reserve to an estate of an Indian individual are not subject to section 87 Indian Act tax relief. They are subject to the normal GST/HST rules.

For further clarification we add the following related statements.

Whether supplied by a trust or some other person, the supply of land on reserve (land must be supplied by way of lease on reserve) may be exempt, or otherwise relieved, or taxable, depending on the nature of the supply.

If the supply of real property on reserve is exempt for purposes of Schedule V to the Excise Tax Act (ETA), the supply is already exempt from taxation and section 87 Indian Act, does not need to apply.

If the supply of real property is not exempt for purposes of Schedule V to the ETA, it may be relieved for purposes of section 87 of the Indian Act if the recipient of the supply is an Indian, band, or band-empowered entity. However, even if it is so relieved, the supply is a commercial activity, with the supplier being subject to the entitlements and obligations associated with a commercial activity for purposes of the ETA (e.g., registration).

There are certain minor restrictions to entitlements under the ETA for persons that are, under an Act of Parliament (such as the Indian Act), not required to pay or remit GST/HST. Examples include the new residential rental property rebate by virtue of subsection 256.2(9), or the GST new housing rebate for sale of house on leased land by virtue of subsection 254.1(2.2). These restrictions are explicitly provided in the ETA.

If the recipient of a supply of real property is a non-Indian, and the supply is not exempt for purposes of Schedule V to the ETA, it will be fully taxable (at 7%, or 15% in the participating provinces).

If a trust or a corporation is deemed to self-supply real property located on reserve, or to undergo a change-in-use of the property, the deemed supply is not subject to section 87 Indian Act tax relief. It is subject to the normal rules.

A supply provided from an estate to a beneficiary may be relieved of GST/HST by virtue of section 87 of the Indian Act if the beneficiary satisfies the requirements of our Technical Information Bulletin B-039R, Application of GST to Indians.

Real property located off-reserve supplied by an Indian estate may be exempt or taxable under the ETA, but it will not be subject to section 87 Indian Act relief.

Continued conditional relief for funeral services of an Indian individual

Notwithstanding our position concerning the estate of an Indian, the conditional relief we provided for funeral services for a deceased Indian individual in XXXXX still stands. In that letter we took the following position:

Funeral services of an Indian individual are relieved of GST/HST where the deceased has been in possession of a Certificate of Indian Status Card issued by the Department of Indian Affairs and Northern Development, and one of the following conditions apply:

1. the burial takes place on reserve; or 2. where the burial is not on a reserve, or when the deceased person is donated to science or it is cremated and there is no burial, a memorial or final service is performed on reserve.

Where the supplier relieves the GST/HST, the supplier must maintain adequate documentary evidence that the funeral service was provided for a deceased Indian and that one of the conditions described above was satisfied.

In cases where the deceased is buried on reserve, the documentary evidence could consist of proof of delivery of the body to a reserve.

In cases where the deceased is not buried on reserve, or is donated to science or cremated (no burial), the documentary evidence could consist of proof of delivery of the body to the off-reserve cemetery, hospital or the crematorium, along with a published notice (an obituary) in the local newspaper listing:

•   the date of death; and

•   the date when internment will be held (when burial is off reserve) and/or

•   the date when the memorial or final service is to be held on a reserve.

In the case where there is no published notice, a letter signed by a Band Official that includes the above information is sufficient.

When the above conditions are met and the recipient of the funeral service of an Indian individual is a person other than a federal government department, the funeral service of an Indian individual is relieved of GST/HST. When a federal government department enters into a contract for the supply of a funeral service for an Indian individual, GST/HST must be collected.

We have reviewed this position and it still is in effect.

If you would like to have clarification of any of the information provided above, please call Dave Caron, Manager of the Aboriginal Affairs Unit, at (613) 954-7957, or myself at (613) 957-1175.

Dwight Kostjuk
Rulings Officer
Aboriginal Affairs Unit
Public Service Bodies and Governments Division
Excise & GST/HST Rulings Directorate