Transcript

Host: Welcome to the segment called Selling to diplomats, Indians, and governments, part of the CRA’s GST/HST Information for a New Small Business video.

With me is Sarah Taylor.

Welcome Sarah.

Subject matter expert: Thank you Kathleen.

Host: Are there any special rules for selling to the government?

Subject matter expert: Yes, but the rules are different based on the level of government you are selling to.

The CRA considers the federal government to be a single entity. It includes all departments, branches, and Crown agencies. Federal Crown corporations are separate registrants.

The federal government pays the GST/HST on its taxable purchases. As a registrant, you have to charge the GST/HST on the sales of taxable goods and services you make to the federal government, including to Crown corporations.

Host: What about provincial or territorial governments?

Subject matter expert: Special rules may apply to supplies to provincial or territorial governments.

In this case, it depends on the province or territory.

The governments of the provinces where HST would apply, in other words, participating provinces, have agreed to pay the GST/HST on their taxable purchases.

In addition, all British Columbia, Quebec and Nunavut government departments and agencies have agreed to pay the GST/HST on their taxable purchases.

So you have to charge the GST/HST on taxable goods and services you make to the departments and agencies of these governments.

Host: What about to the other provincial and territorial governments?

Subject matter expert: The remaining provincial and territorial governments do not pay the GST/HST on their taxable purchases if they provide certification.

You do not charge the GST/HST on taxable goods and services made to these governments if an authorized official provides evidence that they are a provincial or territorial department or entity.

The CRA will accept a certification clause that an authorized official of a provincial or territorial government entity has signed, as satisfactory evidence.

This is a statement on provincial or territorial purchase documents that certifies that a provincial or territorial government is purchasing the goods or services with Crown funds.

As the vendor, you have to keep the purchase documents with the certification clause to maintain your legal obligation to keep proper books and records.

For more information about making supplies to federal, provincial or territorial governments, please refer to the CRA webpage on that topic. The link is included in the related links for this segment.

Host: Are there special rules for sales to diplomats or representatives from foreign governments?

Subject matter expert: As a registrant, you have to charge the GST/HST on taxable goods and services you provide to foreign representatives and diplomats.

You have to charge the GST/HST whether they make purchases for themselves or their organizations.

However, they may be eligible to apply for a GST/HST rebate if you, as the vendor, have given them acceptable documentation for their purchases. They have to apply for the rebate directly with the CRA.

Host: Are there special rules for providing goods and services to Indians, Indian bands, and band-empowered entities which relate to the GST/HST?

Subject matter expert: Yes. Special rules apply to Indians, Indian bands, and band-empowered entities concerning the payment of the GST/HST for the purchase of goods and services. The CRA recognizes that many First Nations people in Canada prefer not to describe themselves as Indians. However, the term Indian is used in this video because it has a legal meaning in the Indian Act.

There are special rules, depending on if the transaction occurs on or off a reserve.

Indians, Indian bands, or unincorporated band-empowered entities, as well as incorporated band-empowered entities acquiring goods for band management activities, can buy goods on a reserve without paying the GST/HST if they have the appropriate documentation to show the vendor. For example, in order to provide tax relief to an Indian individual, the supplier will need to document some of the information from the Indian individual’s status card.

Similarly, if you provide a service and the customer provides proper documentation, the service is performed entirely on a reserve and your customer is an Indian, Indian band or a band-empowered entity and the service consists of band management activities, you would not have to charge the GST/HST.

Anyone who does not have the proper documentation would be charged the full GST or HST as appropriate.

Host: What about transactions that occur off a reserve?

Subject matter expert: Indians, Indian bands, and unincorporated band-empowered entities, as well as incorporated band-empowered entities purchasing for band management activities, may buy goods off the reserve without paying the GST/HST by showing proper documentation to the vendor, where the vendor or the vendor’s agent delivers the goods to the reserve.

However, if the purchaser uses his or her own vehicle to transport the goods to the reserve, the purchase is subject to the normal GST/HST rules.

If the goods are not delivered to the reserve, the GST/HST applies.

Generally, the GST/HST applies to services provided off a reserve to Indian individuals. Services acquired for band management activities or real property in a reserve which are performed off a reserve and acquired by a band or a band-empowered entity are generally relieved of the GST/HST, except for supplies of transportation, short-term accommodation, meals and entertainment.

Special rules apply in Ontario where the provincial part of the HST may be relieved without having the property delivered to a reserve. For information on their rules, go to the CRA webpage on that topic. The link is included in the Related links for this segment.

Host: What’s a good resource for any of these special rules?

Subject matter expert: For more information on aboriginal peoples and taxation go to www.cra.gc.ca/aboriginalpeoples. The link is included in the Related links for this segment.

Host: Thank you Sarah.

This concludes the segment called Selling to Diplomats, Indians and Governments, part of the CRA’s GST/HST Information for A New Small Business video.

Thank you for watching.