The taxpayer had sales to status Indians on a reserve, representing ~7% of total sales. Per CRA guidance (GI‑117, B‑039), GST/HST is not charged on these transactions when goods or services are provided entirely on a reserve.
Key points:
These sales must be reported as part of total sales on the GST/HST return (line 101).
Input tax credits can still be claimed for GST/HST paid on purchases used to make these supplies. [CRA guidance RC4022 : You may be eligible to claim ITCs for any GST/HST paid or payable on purchases you made to supply taxable goods and services to individuals registered under the Indian Act, Indian bands and band‑empowered entities, even though you did not collect the GST/HST on the supply.]
Sales to status Indians on a reserve qualify for relief under section 87 of the Indian Act. They are considered taxable supplies but relieved of tax (similar to zero‑rated supplies in treatment).
Supporting documentation must be retained to verify purchaser eligibility.
Does everything here appear accurate and complete? This is my first experience with these transactions.
What you are asking is really subjective, I gone through few GST, PST audits, for those with sales less than 1% of total sales, typically, the Indican status card, recorded on the invoice, with details on address, indicating to reserve land, accepted, few asked for delivery confirmation to the reserve land as back up. So long you have proper documents, usually not a big issue
Thank you for your replies. Could anyone comment specifically on this part of my post?
Regarding documentation, I advised the taxpayer to contact the CRA directly to ensure proper validation and record keeping of sales to Status Indians on the reserve (although everything can be found in the CRA publications I mentioned in my original post).
What kind of comment are you looking for? Something like “Nice quote - thanks for re-posting it here.”? Or, “That’s not true - CRA’s interpretation of the act is incorrect.”? Or ???
Yes, it seems so, from my experience. One mistake I made for a long time was thinking that it was similar to EXEMPT supplies - I used to fill out lines 90 and 91 instead of just line 101. A few years back I got a phone call from CRA (GST/HST department) wanting more info about the exempt sales. When I explained it was goods/services provided on reserve, they set me straight. However, in that case, my client had an arrangement with their suppliers to not charge GST/PST on parts purchased for jobs to be completed on reserve, so it seemed more like an “exempt” arrangement.
I think PST has a better explanation for this type of transaction if you ever done one. The fact that PST doesn’t apply in that type of situation, doesn’t change the fact that it’s a taxable supply, it’s the fact that, they are entitled to a refundable PST