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GST/HST and Indians
The Indian Act provides the structure for the relationship between Indians and the federal government. Under Section 87 of the Indian Act, the personal property of an Indian or Indian band situated on a reserve and their interests in reserve lands are not subject to tax. The application of the GST/HST is consistent with the provisions of that Act.
GST/HST does not apply to goods or services acquired on reserve, or performed totally on the reserve, by Indians (i.e., persons registered under the Indian Act), Indian bands and unincorporated band-empowered entities. GST/HST does not apply to goods purchased off reserve by Indians, Indian bands and unincorporated band-empowered entities if the goods are delivered to a reserve by the seller or his/her agent. Incorporated band empowered entities buying goods for band management activities either on reserve or off reserve (with delivery to the reserve) are also entitled to this treatment.
GST/HST does not apply to services acquired by an Indian for real property interests on reserve.
The vendor must maintain appropriate documentation to support that the conditions for tax relief have been met. The Canada Revenue Agency (CRA) will accept, as proof, the "Certificate of Indian Status" card issued by the Department of Indian Affairs and Northern Development which states the individual's nine or ten digit registry number or the band name and family number.
GST/HST does apply to off reserve purchases of transportation, short term accommodation, meals and entertainment. However, a rebate is available to recover this tax if these purchases are made for band management activities or for real property interests on reserve.
http://www.firstbusiness.ca/taxes/or_gst.htm
The Indian Act provides the structure for the relationship between Indians and the federal government. Under Section 87 of the Indian Act, the personal property of an Indian or Indian band situated on a reserve and their interests in reserve lands are not subject to tax. The application of the GST/PST is consistent with the provisions of that Act.To help you understand GST and PST as they relate First Nations business, we will consider on reserve versus off reserve, and regulations regarding buying and selling of goods or services. At the end of this section, you will see GST/PST regulations that are applicable both on and off reserve.
Section I: On Reserve
Purchases:
- Status Indians, Indian bands, and unincorporated band-empowered entities do not pay the provincial sales tax (PST) or federal goods and services tax (GST) on goods purchased on reserve.
- Generally, the GST/PST does not apply to services provided to Indians if the services are performed totally on a reserve (such as haircuts or small appliance repairs), or if the services are performed off a reserve and relate to real property interests located on a reserve.
- To buy goods or services without paying GST/PST, the vendor must be shown the proof that the individual is registered under the Indian Act (ie. your Certificate of Indian Status).
- Services acquired on or off a reserve by Indian bands or band-empowered entities for band management activities or for real property on a reserve are not subject to GST/PST.
- GST/PST on goods imported by Indians are subject to the taxes even when they are delivered to a reserve by the vendor's agent or Canada Post (unless some other provision exempts them from tax.)
- Incorporated band empowered entities buying goods for band management activities either on reserve or off reserve (with delivery to the reserve) are also entitled to this tax exemption on the purchase.
Seller/Vendor:
Sales made to a registered Indian:
As a vendor, you must keep adequate evidence that the sale was made to a registered Indian and, if applicable, delivered to a reserve. On the sales slip or on a log write the registry number or band name and family number from the Certificate of Indian Status. If goods are delivered keep proof of delivery to a reserve (eg. waybill, postal receipt, freight bill, dispatch record, or mileage log). The vendor must maintain this documentation to ensure that the conditions for tax relief have been met. The CCRA will accept as proof, the "Certificate of Indian Status" card issued by the Department of Indian Affairs and Northern Development (DIAND).
Sales made to a non-Indian:
- The exemption under section 87 of the Indian Act does not apply to sales or supplies made to non-Indians on a reserve.
- All businesses operating on reserves must meet the general registration requirements for GST/PST and collect and remit GST/PST on the taxable sales they make to any person who is not an Indian.
- See Section III for more information as relates to all sales made at any location.
Section II: Off Reserve
Purchases
- Where Status Indians make purchases off reserve and take possession of the goods at the time of sale, such as restaurant meals, or clothing, they are required to pay both PST and GST as applicable, unless the goods are delivered to a reserve by the vendor or the vendor's agent.
- The exemption under section 87 of the Indian Act does not apply when an Indian, an Indian band, or a band-empowered entity buyer takes possession of goods off a reserve and self-delivers the goods to the reserve. Requirement may be waived if a remote store qualifies, and if they deal mainly with customers who are Indians, Indian bands, and band-empowered entities.
- Incorporated band empowered entities buying goods either on reserve or off reserve (with delivery to the reserve) are also entitled to tax exemption if the purchases are for band management activities or for real property on a reserve.
- Exception to the above: Indian bands or band-empowered entities will pay the tax on off-reserve purchases of transportation, short-term accommodation, meals and entertainment. A General Rebate is available to recover this tax if application is made and these purchases were acquired for band management activities or for real property located on reserve.
Seller/Vendor
- If you make sales to a Registered Indian off reserve tax exemption may apply if the goods are to be delivered to a reserve by the vendor or the vendor's agent. You must keep adequate evidence that the sale was made to a registered Indian and delivered to a reserve. On the sales slip or on a log write the registry number or band name and family number from the Certificate of Indian Status. Keep proof of delivery to the reserve (eg. waybill, postal receipt, freight bill, dispatch record, or mileage log). The vendor must maintain this documentation to ensure that the conditions for tax relief have been met. The CCRA will accept, as proof, the "Certificate of Indian Status" card issued by the Department of Indian Affairs and Northern Development (DIAND).
- See Section III for more off reserve vendor information for all locations.
Section III: On and Off reserve regulations
GST Registration
- If your business brings in annual revenues of over $30,000 (from taxable goods and services, or if you are a taxi or limousine operator) you must register for the GST. If your annual GST-taxable sales and revenues are under $30,000, you don't have to register, but nothing is stopping you from registering, as long as you are running a business. When you register for the GST, you will be assigned a Business Number (BN). With this BN, you will have access to your various Revenue Canada accounts (corporate income tax, import/export, payroll deductions, GST).
- All businesses operating off reserve have to meet the general registration requirements for GST/PST, and collect and remit GST/PST on the taxable sales they make to any person.
- As a rule, you can deduct the expenses necessary for earning a business income, including any goods and services tax (GST) you pay on these expenses.
If you have any questions about a particular situation, it is recommended you contact your district taxation office. For further information about these issues contact:
Canada Customs and Revenue Agency, Tax Services
Vancouver District Office
1166 West Pender St.
Vancouver, BC V6E 3H8
General Inquiries: 689-5411 or 1-800-663-9033
Business, GST Payroll: 1-800-959-5525
Requests for forms: 669-7577 or 1-800-663-1665
PST Registration
- You are required to register as a vendor with the Consumer Taxation Branch if you regularly make taxable sales of goods or lease taxable goods as a lessor or provide taxable services.
- You must register with the Consumer Taxation Branch and collect social service tax (retail sales tax) on your taxable sales and leases. You must complete an Application for Registration as a Vendor Pursuant to the Social Service Tax Act form (FIN 418), or register on-line.
- The Consumer Taxation Branch will issue you a Certificate of Registration and provide information on your responsibilities.
If you are unsure whether you are required to register, please contact the nearest Consumer Taxation Branch office or enquire on line at www.rev.gov.bc.ca/ctb/ContactUs.htm
Monday, October 01, 2007
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