Ontario strikes agreement to maintain tax-free status for First Nations after HST starts July 1, 2010

Ontario Government press release

First Nations in Ontario, represented by the Political Confederacy, and the Government of Ontario represented by Minister of Aboriginal Affairs Chris Bentley and Minister of Revenue John Wilkinson have entered into a Memorandum of Agreement. The agreement commits the parties to work together to realize the continuation of the First Nation point of sale tax exemption within the framework of the Harmonized Sales Tax (HST), which is set to come into effect on July 1, 2010.

Currently, First Nations in Ontario who are status Indians receive a point of sale tax exemption under the retail sales tax on the purchase of goods both on and off-reserve. However, because the HST will be administered by the federal government, unless something is done First Nations stand to lose the point of sale exemption for the purchase of goods off reserve. The federal government administers the HST in the same way they administer the Goods and Services Tax (GST), which means that off-reserve purchases of goods will only be exempt if they are delivered to the reserve by the vendor or the vendor’s agent.

The Government of Ontario supports the First Nations in Ontario with respect to continuing the current First Nation point of sale tax exemption under the HST framework.

Ontario has committed to work shoulder to shoulder with First Nations to realize this objective and to engage the federal government to accept the point of sale exemption. The joint work will also include First Nations and the Ontario government working together to address the concerns raised by the federal government relating to data and accounting requirements necessary for the administration of the HST.

“The Memorandum of Agreement signed today is a positive step toward achieving our objective to ensure that the First Nations point of sale exemption continues under the HST framework. The Government of Ontario has committed to work with us to realize our priority — which is to ensure that we do not lose our point of sale exemption. We also want to ensure that First Nations people, many of whom struggle at or below the poverty line, are not impacted by the move to the HST,” stated Ontario Regional Chief Angus Toulouse.

Regional Chief Toulouse explained that this agreement is a step forward in the effort to preserve the point of sale exemption. The focus now shifts to the federal government to cooperate with First Nations and the Ontario government to work towards a resolution before July 1st. However, is they are not able to convince the federal government by July 1st, the agreement recognizes that interim relief may be necessary while the restoration of the point of sale exemption is being finalized.

The Memorandum of Agreement must be presented to the First Nations leadership in Ontario for ratification at a Chiefs Assembly at the earliest possible opportunity.

“This agreement demonstrates our commitment to working with Ontario’s First Nations to safeguard the current point of sale exemptions under the new HST. We realize this is a vital issue for First Nations people and we will continue in our efforts to secure a federally approved and administered tax exemption,” said Chris Bentley
Ontario’s Minister of Aboriginal Affairs

“The Memorandum of Agreement makes Ontario’s position very clear, and is an important step forward in working with First Nations leaders to bring the federal government on side,” said John Wilkinson Ontario’s Minister of Revenue.

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