21 January 2005 GST/HST Ruling 53556 - Artificial Breathing Apparatus

Please note that the following document, although correct at the time of issue, may not represent the current position of the Agency. / Veuillez prendre note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'Agence.     

As an exercise prompted by a query from XXXXX of your office, we have reviewed our interpretation concerning the nature of band-empowered entities (BEEs). XXXXX issued an interpretation in the form of an internal memorandum XXXXX addressed to XXXXX your office. At the time of the issuing of the memorandum, we agreed with XXXXX interpretation XXXXX concerning XXXXX, that XXXXX did not meet the definition of a BEE, as it is owned or controlled by a BEE XXXXX and not by a band, a tribal council, or a group of bands other than a tribal council. Upon review, however, we feel that the following clarification should be made.

The following is a summary of the background information concerning XXXXX:

1. XXXXX is incorporated under the XXXXX (the Act). It is not registered for GST/HST purposes. It maintains a presence on reserve in that its head office is located on the XXXXX Reserve XXXXX.

2. XXXXX was established by the XXXXX through XXXXX to oversee the XXXXX conducted on reserves XXXXX. XXXXX does not engage in any commercial activity. XXXXX is registered for GST/HST purposes. It is owned or controlled by a group of Indian bands. Its head office is located on the XXXXX Reserve XXXXX.

3. XXXXX indicates XXXXX that there is only one class of membership having all rights of membership. XXXXX indicates that the minimum number of directors of XXXXX is XXXXX and the maximum is XXXXX. XXXXX indicates that the person to whom the remaining property is to be distributed in the course of liquidation and dissolution is the XXXXX on such terms and conditions as may from time to time be decided upon by the XXXXX which decisions shall be carried out by XXXXX.

4. XXXXX by-laws indicates that XXXXX board of directors shall consist of XXXXX directors. The quorum for the transaction of business at any meeting of the board of directors shall consist of XXXXX directors. XXXXX by-laws provides the method of election of directors. It indicates that the XXXXX of the XXXXX on behalf of the member shall from time to time, as it may decide, elect the directors of XXXXX by resolution passed at a meeting of the XXXXX called for that purpose.

5. XXXXX by-laws indicates that the sole membership to be issued shall be issued to the XXXXX. No other memberships shall be issued without the approval of XXXXX. XXXXX by-laws indicates that the annual meeting of members shall be held at such time in each year, and subject to XXXXX by-laws, at such place as the board of directors, the chairman of the board of directors, or the president may from time to time determine, for the purpose of considering the financial statements and reports required by the Act to be placed before the annual meeting, electing directors, appointing an auditor and for the transaction of such other business as may properly be brought before the meeting.

6. XXXXX by-laws indicates that the chairman of the board of directors shall, on behalf of the board of directors, report to the XXXXX on the affairs of the XXXXX and shall if so requested report on the same matters to XXXXX. XXXXX by-laws indicates that the chairman of the board of directors shall report to the board of directors any guidance or advice that XXXXX has offered to XXXXX.

7. XXXXX.

Based on this statement of facts, we make the clarification here that XXXXX is a BEE as defined in Technical Information Bulletin B-039R, GST Administrative Policy - Application of GST to Indians (B-039R).

Position

A BEE, as defined under B-039R, may be a corporation owned or controlled by a band, a tribal council or a group of bands other than a tribal council.

The XXXXX has been considered as a group of bands XXXXX for purposes of B-039R. As such, an entity owned or controlled by XXXXX will be eligible to be determined as a BEE where the other requirements under B-039R are met.

Based on the facts set out above, the CRA takes the position that XXXXX is owned by XXXXX, because the group of bands XXXXX that make up XXXXX owns all of the memberships of the entity, satisfying the ownership part of the definition for a BEE.

Dave Caron
Manager, Aboriginal Affairs Unit
PSBs & Governments Division,
Excise & GST/HST Rulings Directorate

2005/01/11 — RITS 54061 — Subsections 317(2) and (8) of the Excise Tax Act