1 August 2003 GST/HST Interpretation 46257 - Maintenance and Repair Services Made to Tangible Personal Property (E.g., to Vehicles) Acquired by Indian Bands and BEEs From a Supplier Located Off Reserve

Thank you for your query concerning supplies of vehicle maintenance and repair services acquired by bands and band-empowered entities (BEEs) at a location off reserve. You would like to understand our position concerning the application of Technical Information Bulletin B-039R, Application of GST to Indians to this issue.

Vehicle maintenance and vehicle repairs often are a combination of the supplies of both property and services. The interpretation provided here is consistent with the tax relief provided in B-039R.

Off-reserve vehicle maintenance:

Oil changes:

Assuming that the oil is of the grades of motor oils typically provided by the oil-change service industry, the supply of an oil change is tax-relieved when provided off reserve to a band or a BEE where the supply is acquired for band management activities (BMA), and the certification condition of B-039R is met.

Although the oil supplied with the service may be considered to be tangible personal property (TPP) acquired off reserve (and not delivered to reserve), for purposes of B-039R the oil is considered to be part of the supply of the service, even if the oil is identified separately on the invoice.

Tune-ups:

A tune-up is a diagnostic and maintenance service that may lead to repairs. Where no parts are supplied with the service, the service will be tax-relieved where the vehicle is for use in BMA (with B-039R's conditions met). If the value of the parts supplied is more than incidental, the delivery requirement (described below) will have to be satisfied for tax relief to apply to them. In general, inexpensive parts are considered to be a supply incidental to the service. A determination as to whether a vehicle repair is a single supply of a service or multiple supplies of TPP and services will be made on a case-by-case basis.

The delivery requirement for automotive parts:

Where the parts are more than an incidental component of the supply, they are not relieved of tax unless they are delivered by the vendor or the vendor's agent to a reserve for instalment there, or the vehicle (after instalment of the parts) is delivered to a reserve by the vendor or the vendor's agent. The parts must be clearly accounted for in the invoice. When an incorporated BEE situated on reserve is acquiring the parts, a single certificate attesting to the use of the vehicle in BMA will suffice to relieve both the supply of the service and the supply of the delivered parts. In any other case, to relieve the parts no certificate is required; evidence retained by the supplier that the property or vehicle was delivered to a reserve by the vendor or vendor's agent will suffice.

Installation of new tires:

The cost of the service for mounting newly purchased tires may be absorbed in the retail price of the new tires, or may be incidental to the supply of the TPP. Where the supplier charges a separate installation fee (above the price of the tires), and the fee is separately identified on the invoice, that service will be relieved of GST/HST if B-039R's conditions are met. The tires will be subject to GST/HST, unless the delivery requirement described above is satisfied. If a tire blows out on the road, and a replacement tire has to be installed, the supply will be subject to tax unless the tire is replaced on reserve and the other conditions for tax relief under B-039R are met.

Emergency repair of tires:

If a tire develops a leak and has to be repaired with a patch or tube at a service station on an off-reserve roadway, the service will be relieved if the vehicle is for use in BMA and certification is provided by the band or BEE and retained by the supplier.

Rotation / balancing of tires:

Where no TPP is supplied with these services, the service is relieved of tax when applied to a vehicle for use in BMA, and the certification condition is met. Where TPP is supplied, the case will have to be assessed to determine if there is justification to treat any parts supplied as incidental to the supply of the service.

Vehicle repairs, including heater core and hose replacements; exhaust replacement; major replacements (such as for engines, transmissions, and axles/boot assemblies):

These quite major repairs represent a supply of a combination of TPP of very significant value and of a service of very significant value. Conventionally, a single invoice contains a breakdown of the costs for the labour and for the parts supplied. Invoices for vehicular repair services that have parts and labour identified separately and are acquired off reserve by a band or a BEE on a vehicle for use in BMA will be relieved from GST/HST for the service portion, if the certification condition is met.

TPP supplied with major repairs:

In order for the supply of the parts to be relieved of GST/HST:

•   the parts must be clearly identified on the invoice; and

•   the delivery requirement for automotive parts, as described above, must be satisfied.

Insurance claims:

Suppliers of automotive repair services based on insurance claims generally issue invoices made out in the name of the insured person, not the insurer. As a result, this interpretation for vehicle maintenance and repairs will apply where the invoices are made out in the name of a band or a BEE.

A question of fact, subject to review on a case-by-case basis:

Despite the general conditions for relief described above, there will be supplies where it is a question of fact that the value of the part is significant enough that it has to be delivered to a reserve for tax relief to apply, or that the vehicle is for use in BMA.

Note that the value attached to the parts supplied with a repair service should reasonably represent the fair market value of those parts.

Where the parts appear on the invoice without a value, or where the parts supplied have not been listed, CCRA may make a determination based on the facts of the case.

Interpretation is specific in its application:

This interpretation is specific in application to maintenance and repair services of TPP, particularly of vehicles because they commonly are at issue, provided to Indian bands and BEEs (but not to individual Indians) such that it does not apply to other acquisitions involving Indians, Indian bands and BEEs, including those at remote stores.

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 the author at (613) 957-1175.

Dwight Kostjuk
Aboriginal Affairs Unit
PSBs & Governments Division
Excise & GST/HST Rulings Directorate