Updated October 14,2008
Retail Sales Tax Guide 808
RST Guide 808, November
2006
- The information in this guide explains how Retail Sales Tax (RST)
applies to purchases of taxable goods and services made by Status
Indians, Indian bands and band councils. Please note that this guide
replaces the previous version dated July 2005.
Status Indians
Status Indians hold "Certificate of Indian Status" identity cards
issued by the federal government. These cards are numbered and contain a
photograph, name and the Indian band or registry number of the card
holder.
Reserve Defined
A reserve is defined under the federal government statute, the
Indian Act (Canada). This definition is used for
RST purposes, and includes a
settlement located on Crown land in which Status Indian residents are
treated by the Department of Indian Affairs and Northern Development
(Canada) in the same manner as Status Indians living on a reserve.
Exempt Purchases
General
Status Indians, Indian bands and band councils may purchase most goods
or services without paying RST,
as long as the goods are for use on the reserve. Services, such as
commercial parking, transient accommodation, and telecommunication
services, must be provided on the reserve in order to be exempt from
RST.
To claim an exemption, Status Indians must show vendors their federal
"Certificate of Indian Status" identity card. Indian bands and band
councils must provide the vendor with a valid Purchase Exemption
Certificate (PEC).
See RST Guide
204 -
Purchase Exemption Certificates for further details.
Insurance Premiums
The 8 per cent RST does not
apply to contracts of insurance entered into by Status Indians, Indian
bands or band councils in respect of property located on a reserve.
If a Status Indian resident on a reserve works for an employer located
off- reserve, the premium payments made by both the Status Indian and the
employer for group insurance are exempt from
RST.
RST is also not charged on
amounts paid into a benefits plan, either by or for a Status Indian
resident on a reserve.
Effective April 1, 2004, RST
has been eliminated on premiums paid for all contracts of automobile
insurance.
Motor Vehicles
Status Indians, Indian bands and band councils may purchase motor
vehicles on-reserve exempt from Retail Sales Tax (RST), including the tax
for fuel conservation, regardless of the address to which these vehicles
are registered.
When Status Indians, Indian bands and band councils purchase motor
vehicles off-reserve and register them to a non-reserve address, they are
entitled to an exemption from RST
provided the purchaser shows their "Certificate of Indian Status" identity
card (individual Status Indians) or issues a valid
PEC (Indian
bands and band councils) to the vendor, and the vendor arranges to have
the vehicle delivered to a reserve.
When motor vehicles are purchased off-reserve and registered to a
reserve address, Status Indians, Indian bands and band councils are
eligible for an exemption from RST
provided the purchaser shows their "Certificate of Indian Status" identity
card (individual Status Indians) or issues a valid
PEC (Indian
bands and band councils) to the vendor.
The vendor must record on the invoice the Status Indian's federal
"Certificate of Indian Status" identity card number, name, and Indian band
or registry number to substantiate the non-collection of
RST.
Status Indians may claim an exemption from
RST when purchasing repair
parts over the counter or repairs (parts and labour in a single
transaction or labour only) by presenting their federal "Certificate of
Indian Status" identity card. The vendor must record on the invoice the
Status Indian's card number, name and Indian band or registry number to
substantiate the non-collection of RST.
Indian bands and band councils must issue a valid
PEC.
Leases of Motor Vehicles
RST does not apply to lease
payments, or short-term rentals (i.e., less than 12 months), on motor
vehicles leased on-reserve by Status Indians, Indian bands or band
councils regardless of the address to which these vehicles are registered.
When Status Indians, Indian bands and band councils lease motor
vehicles off- reserve and register them to a non-reserve address, they are
entitled to an exemption from RST
provided the lessee shows their "Certificate of Indian Status" identity
card (individual Status Indians) or issues a valid
PEC (Indian
bands and band councils) to the lessor, and the lessor arranges to have
the vehicle delivered to a reserve.
When motor vehicles are leased off-reserve and registered to a reserve
address, Status Indians, Indian bands and band councils are eligible for
an exemption from RST provided
the lessee shows their "Certificate of Indian Status" identity card
(individual Status Indians) or issues a valid
PEC (Indian
bands and band councils) to the lessor, the address on the lease agreement
is a reserve address, the plate is registered to the reserve address (this
does not apply to daily/weekly rentals) and the insurance for the vehicle
is registered to the reserve address.
The vendor must record on the lease agreement the Status Indian's
federal "Certificate of Indian Status" card number, name, and Indian band
or registry number to substantiate the noncollection of
RST. Indian bands and band
councils must provide the vendor with a valid
PEC.
Building Materials
Contractors may purchase building materials exempt from Retail Sales
Tax (RST) for certain buildings and structures situated on reserves. To
qualify for the exemption, the cost of such projects must be paid for by
the band council, and the buildings, such as a community centre, hospital,
school, etc., must provide a community service for the reserve. When
entering into a construction contract for an exempt community building
project, the contract should be made on an
RST-excluded basis.
If an Indian band or band council rents reserve housing to individual
Status Indians, and the cost of the housing construction is paid directly
by an Indian band or band council, the contractor may purchase the
materials incorporated into the housing exempt from
RST by giving suppliers a
valid PEC. The
rental of housing by an Indian band or band council is considered to be
the provision of a community service. Indian bands and band councils
should request that contractors quote tenders on an
RST-excluded basis.
The exemption for contractors applies only to the preceding conditions
detailed in this section. Contractors, including contracting corporations
owned by Status Indians, Indian bands and band councils, must pay
RST on items purchased for a
building or structure, such as a house, built for Status Indians on a
reserve. Since contractors are the end consumers of all items purchased
for real property contracts, they are responsible for determining how
RST applies when entering into
this type of contract.
Individual Status Indians can purchase building materials exempt from
RST if the materials are
purchased for their own use on a reserve. The vendor must record the
Status Indian's federal "Certificate of Indian Status" card number, name,
and Indian band or registry number on the invoice.
Taxable Purchases
Off-Reserve
Goods purchased off-reserve are taxable when they will be used or
consumed off-reserve. For example, Status Indians, Indian bands and band
councils must pay RST on goods
delivered to an off-reserve address. Transient accommodation (i.e.,
lodging for stays of less than one month), prices of admission over $4.00,
telecommunication services, and parking are also taxable when rendered off
the reserve.
Prepared Foods
Status Indians, Indian bands and band councils must pay
RST on purchases of take-out
meals and prepared food products, costing more than $4.00, when these
products are picked up by the Status Indian, Indian band or band council
for consumption on or off the reserve, or are delivered to an address off
the reserve.
RST does not apply if the
prepared food products are delivered directly to a Status Indian, Indian
band or band council on the reserve for consumption on the reserve.
Alcoholic Beverages
Status Indians, Indian bands and band councils are required to pay
RST on alcoholic beverages
purchased off the reserve, regardless of whether the beverages are
consumed off or on the reserve. Sales of alcoholic beverages are exempt
from RST only when they are
sold on the reserve to Status Indians, Indian bands or band councils for
consumption on the reserve. Sales of alcoholic beverages made on reserves
to anyone other than Status Indians, Indian bands or band councils are
taxable.
Other Persons
Taxable goods and services acquired on reserves by persons other than
Status Indians, Indian bands or band councils are subject to Retail Sales
Tax (RST).
Corporations
The RST exemptions for
Status Indians, Indian bands and band councils are not available to
corporations owned by Status Indians, Indian bands or band councils. Such
corporations must pay RST on
taxable goods, taxable services, and insurance premiums, in the same
manner as other corporations.
Vendor Responsibilities
At the time taxable goods or services are purchased, Status Indians,
Indian bands and band councils may claim an exemption from
RST, provided the items will
be used on a reserve.
Exceptions are detailed under Taxable Purchases in
this guide. If a Status Indian, Indian band or band council takes the
purchases with them, vendors should note the Status Indian's federal
"Certificate of Indian Status" card number, name, and Indian band or
registry number, and a brief description of the goods or services sold, in
their records.
Vendors are authorized to accept only the federal "Certificate of
Indian Status" card to support the RST
exemption for purchases made by individual Status Indians.
Indian bands and band councils must provide a valid
PEC. A federal
identification card cannot be used when buying on behalf of the Indian
band or band council.
When goods are delivered to a reserve, the delivery slip or bill of
lading should contain enough information (i.e., place of delivery) to
prove that the RST exemption
was valid. These records should be kept for audit purposes.
Businesses situated and operating on a reserve are required to register
with the Ministry of Revenue if they sell taxable goods or provide taxable
services. These businesses are required to charge, collect and remit
RST on all taxable sales,
unless the purchaser provides a
PEC. Status
Indians purchasing taxable goods from vendors on a reserve are not
required to pay RST, provided
the goods will be used on a reserve and they show their "Certificate of
Indian Status" card to the vendor.
Refunds
Status Indians, Indian bands and band councils, and contractors who
believe they have incorrectly paid RST,
may apply to the Ontario Ministry of Revenue for an
RST refund within four years
of the date they paid the RST
by completing a
General
Application for Refund of Retail Sales Tax form.
Legislative References
- Retail Sales Tax Act, paragraphs 7(1) 59 and 7(1) 60;
clause 2.1(8)(f);
- Regulation 1012, sections 1 and 6
- Regulation 1013, section 15
For More Information
For information related to the "Certificate of Indian Status Card",
please contact Indian and Northern Affairs Canada at 1 800 567-9604.
Recorded information is available by telephone at 819 953-7915.
Information is also available from the Indian and Northern Affairs Canada
website at
www.ainc-inac.gc.ca.
The information contained in this publication is only a guideline. For
more information, please contact the Ontario Ministry of Revenue at 1 866 ONT-TAXS
(1 866 668-8297) or visit our website at
ontario.ca/revenue.
IMPORTANT NOTICE
(Tax Exemption)
I have been receiving numberous
calls from individuals that have acquired the BAC red-lined identification
card, and are using it for tax exception purposes.This
is fraud.
Many individuals are being
misinformed by the management at the Petawawa
office, so we have posted Canada’s law
regarding this matter.Please carefully read it and should you have any
questions, please contact me, Chief Richard
Zohr at (613) 433-9085 or the OPP.
