Dear XXXXX
Your memorandum dated July 27, 1994, and addressed to Dave Caron has been referred to the Special Cases Unit of General Tax Policy for reply. We apologize for the delay in our response.
We understand that you have received two requests concerning joint ventures where the operator is an Indian or an Indian band. The activity of the joint ventures is the development of land and the construction of residential complexes. The query that you have received is if the operator and the participant make a joint election pursuant to section 273, can the tax relief afforded Indians be passed on to the participant.
In response to your first question the election pursuant to section 273 is available where the operator is an Indian or an Indian band. There is no provision that denies the Indian or Indian band from making the election as operator provided that the activity of the joint venture is commercial activity.
In response to your second question, subsection 273(1.1) will only apply in the case of activities which are not commercial activities and the operator is a government (other than federal Crown agents that are prescribed under the Crown Agents (GST) Regulations) or a person who is not required to pay tax by virtue of an Act of Parliament. The purpose of the subsection is to prevent the operator from providing the other co-venturers with the benefits of the operator's tax-free status in cases where full input tax credits would not otherwise be available to the other co-venturers. We agree with your statement that the development of land and construction of single unit residential complexes and multiple unit residential complexes are commercial activities. Therefore, subsection 273(1.1) does not apply.
In addition to these questions which you have specifically posed, we recognize that there are other issues related to the self supply of real property by an Indian or Indian band and the section 254.1 rebate. We have brought these issues to the attention of A. Venne, Director, Policy and Legislation, Special Sectors, and they are currently under consideration.
If you have any questions in respect of the above, please contact Sandy Marr, General Tax Policy Officer, Special Cases and Projects Unit at (613) 957-8253. Questions relating to the self supply of real property and the section 254.1 rebate should be referred to Mr. Venne x who can be reached at XXXXX
Sincerely,
H. L. Jones
Director
General Tax Policy
Policy and Legislation
XXXXX
| c.c.: |
S. Marr GTP: XXXXX
S. Moran
A. Venne
E. Vermes
S. Farber |
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