Please note that the following document, although correct at the time of issue, may not represent the current position of the Canada Revenue Agency. / Veuillez prendre note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'Agence du revenu du Canada.
Excise and Specialty Tax Directorate
Place de Ville, Tower A, 11th floor
320 Queen Street
Ottawa ON K1A 0L5
[Client]
[Client Address]
Attention: [Client]
Case Number: 244311
June 8, 2023
Dear [Client]:
Subject: Application of the luxury tax
Thank you for your letters dated [mm/dd/yyyy] and [mm/dd/yyyy], concerning the application of the Select Luxury Items Tax Act (the Act) to the operations of your members, as it pertains to sales of subject vehicles by motor vehicle dealers to Status Indians. Also, thank you for our call on [mm/dd/yyyy], and notifying the Canada Revenue Agency (CRA) that only the letter dated [mm/dd/yyyy] is to be addressed.
STATEMENT OF FACTS
Based on your letters, the following is our understanding of the facts provided :
1. [Client] has approximately [#] [members] operating in Ontario.
2. [Client] members may have sales of subject vehicles to Status Indians.
RULING REQUESTED
You would like the CRA to confirm whether a Status Indian is exempt from the application of the Act on the purchase of a subject vehicle over the threshold amount of $100,000 from a motor vehicle dealer who delivers the subject vehicle on an Indian Reserve.
DECISION
The luxury tax applies to vehicles that meet the definition of subject vehicle under the Act and are priced or valued above the $100,000 price threshold. There are no exemptions under the Act for Status Indian, and in most cases, the vendor of the subject vehicle is liable for the luxury tax on the sale.
Subsection 87(1) of the Indian Act states the following:
87 (1) Notwithstanding any other Act of Parliament or any Act of the legislature of a province, but subject to section 83 and section 5 of the First Nations Fiscal Management Act, the following property is exempt from taxation:
(a) the interest of an Indian or a band in reserve lands or surrendered lands; and
(b) the personal property of an Indian or a band situated on a reserve.
Subsection 87(1) of the Indian Act does not apply when the tax is payable by the vendor, earlier in the commercial chain. When there is no tax liability, the exemption of section 87 of the Indian Act cannot be claimed by a purchaser that is a Status Indian despite the subject vehicle being delivered on reserve.
I trust the above is satisfactory. If you have any questions or concerns, please contact me at 343-572-4194.
Yours truly,
Alfonso Capretta
Acting Manager
Luxury Tax Unit
Excise Tax and Fuel Charge Division
Excise and Specialty Tax Directorate
Legislative Policy and Regulatory Affairs Branch
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