It may have passed undetected, under the radar, when it was announced on June 17th, but a new exemption has been added in relation to the 8% Ontario provincial portion of the HST. Status Indians, starting tomorrow, September 1, are entitled to a "point-of-sale" exemption for goods and services purchased from HST registrants. Effectively, status Indians, purchasing goods or services "off-reserve" will pay only the 5% GST on many goods and services.
While this rebate is much broader than existing GST/HST exemptions for status Indians, (generally limited to "on-reserve" purchases), it must be noted that the rebate does not apply to all goods and services. The intent being to continue only exemptions that existed under the old Ontario Retail Sales Tax regime.
Goods and services covered by the rebate.
Supplies of the following would qualify as off-reserve supplies for the purposes of the Ontario Status Indians point-of-sale exemption:
•Unless specifically provided for below, tangible personal property (i.e. goods) that is not purchased on a reserve,
•New and used motor vehicles purchased off-reserve from a motor vehicle dealer;
•Take-out meals that are not purchased on a reserve, but not including restaurant meals or catering services;
•Telecommunication services (including cable television, telephone, Internet) provided to a Status Indian and that are not provided on a reserve;
•Services of installing, assembling, dismantling, adjusting, repairing or maintaining tangible personal property that are not performed on a reserve; and
•Contracts for maintenance and warranty of tangible personal property (including motor vehicles) that are not purchased on a reserve. "Eligible Services" section below sets out further detail with respect to the specific services eligible for the point-of-sale exemption.
Goods and services not covered by the rebate.
Supplies of the following will not be qualifying off-reserve supplies and therefore will not qualify for the Ontario Status Indians point-of-sale exemption and will be subject to HST. These include:
•Gasoline, fuel, alcoholic beverages and tobacco that is not purchased on a reserve;
•Restaurant meals (other than take-out meals) and catering services;
•Energy (including electricity and natural gas) that is not provided to a reserve address;
•All other services (that are not GST/HST relieved to Status Indians or listed above) that are not performed on a reserve. Examples of services that are not eligible for the point-of-sale exemption and generally remain taxable when not performed on a reserve include haircuts, massage therapy, dry-cleaning, home renovations, funeral services;
•Intangible personal property that is not situated on a reserve;
•Goods or eligible services purchased via Internet or other distribution channels for which presentation of a Status card to verify eligibility is not possible; and
•Real property (e.g., new homes, condos and mobile homes), transient accommodation (i.e., hotel accommodation), and parking, that is not located on a reserve.
Application problems.
By definition, "point-of-sales" rebates create administrative problems for vendors; cash registers must be able to handle various tax rates and the tax credit must be accounted for appropriately in order not to represent a cost for the registrant. This new rebate for status Indians is no exception. In fact, it may be more problematic.
Many vendors will tell you: a large number of natives feel they should not pay any taxes! Having been informed of this new HST rebate, in some cases, it will take a lot of explanation from the vendor to justify application of the 5% , but not the 8% provincial portion of the HST.
Nevertheless, and I suspect there will be more grumbling about this, like all Ontarians, natives pay more tax under the HST on a number of goods or services. For example, gasoline purchases , which were not subject to the old 8% RST are now subject to the full 13% HST; as such these goods are not covered by the new rebate. The same is true about services that weren't taxed under the RST, such as haircuts. Let's just hope that scalping does not make a comeback.
Again, the HST introduction burdens the GST/HST registrant with more administrative controls and problems..
Transition refund
Our friendly native readers are reminded that while the "point-of-sale" rebate begins on September 1, the Ontario Ministry of Revenue does provide a refund for the 8% provincial portion of the HST on qualifying purchased made during the period of July 1 to August 31. To obtain the refund, an application must be filed using the General Refund Application form; refunds claims must be accompanied by copies of sales receipts showing the tax was charged along with copies of both sides of the status Indian card. There is a deadline of November 1, 2010 to file these transition refund claims.
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