First Nations Goods and Services Tax

The Canada Revenue Agency (CRA) wants you to be aware of FNGST requirements that apply to you as an Indian under the Indian Act. We recognize that many First Nations people in Canada prefer not to be described as Indians. However, the term Indian is used because it has a legal meaning in the Indian Act.

Overview

The First Nations Goods and Services Tax (FNGST) is a tax that may be imposed by a band council or other governing body of a First Nation, listed in Schedule 1 to the First Nations Goods and Services Tax Act, on the lands that it governs. FNGST at 5% applies to most supplies of property and services made on these lands. The GST, or the federal part of the HST, does not apply to sales on these First Nations lands. The FNGST has the same basic rules as the GST/HST. The same property and services that are taxable under the GST/HST are taxable under the FNGST. The FNGST does not apply to zero-rated or exempt supplies. The CRA administers the FNGST for the First Nations.

Who pays the FNGST

Everyone has to pay the FNGST on the sale of property and services made on land where the FNGST applies, except for certain provincial and territorial governments. For more information, see Find out if the GST/HST applies to provincial and territorial governments. In some cases where you bring property or services onto the land where the FNGST applies, you may need to self-assess the tax. For more information, see Self-assessing the FNGST.

First Nations that impose the FNGST

The following chart shows the First Nations that impose the FNGST, the lands affected, and the effective date of the tax.

Registering for the FNGST

• you have to charge the FNGST on your taxable sales made on land where the FNGST applies
• you have to charge the GST/HST on your taxable sales made in the rest of Canada
• you may be able to claim input tax credits (ITCs) to recover the FNGST on your purchases and expenses made on land where the tax applies (for more information, see Input tax credits)
• you may be able to claim ITCs to recover the GST/HST you paid on purchases and expenses made in the rest of Canada

If you are not a GST/HST registrant, you do not charge the FNGST to your customers.

Charging the FNGST

You charge the FNGST on:

• property that is sold on land where the FNGST applies
• property that is delivered to land where the FNGST applies
• services performed on land where the FNGST applies

You do not charge the tax when certain provincial or territorial governments acquire the property or services. For more information, see Find out if the GST/HST applies to provincial and territorial governments.

The FNGST also applies to leases of most vehicles (other than racing cars) if:

• the lease period is more than three months
• the individual paying for the lease usually lives on lands where the FNGST applies when the supply is made (even if the supply is made off of lands where the FNGST applies)

An individual lives on the land of a First Nation where the FNGST applies. He orders a bicycle by telephone from a department store catalogue. He asks that the bicycle be delivered to his residence. The bicycle is being delivered to land where the FNGST applies. Therefore, the 5% FNGST applies to the supply.

A university student who usually lives on the land of a First Nation where the FNGST applies temporarily lives on a campus that is located off First Nation land. They lease a vehicle for a period of three years and take delivery of this vehicle off of land where the FNGST applies. The FNGST applies to the lease payments because the student is considered to be usually living on the land of a First Nation where the FNGST applies.

Example - Goods delivered to land where the FNGST applies

An Indian individual lives on the land of a First Nation where the FNGST applies. He orders a bicycle by telephone from a department store catalogue. He asks that the bicycle be delivered to his residence. The bicycle is being delivered to land where the FNGST applies. Therefore, the 5% FNGST applies to the supply.

Example - Leasing of a vehicle for more than three months

An Indian university student who ordinarily resides on the land of a First Nation where the FNGST applies temporarily lives on a campus that is located off First Nation land. She leases a vehicle for a period of three years. The FNGST applies to the lease payments because the student is considered to ordinarily be residing on the land of a First Nation where the FNGST applies.

Information to include on your receipts or invoices when the FNGST applies

You need to let your customers know the amount of tax payable or paid, or indicate that the tax is included in the price. As the FNGST is seamless with the GST/HST, there is no requirement to specify that it is FNGST and not the GST/HST that applies to their purchases. You can use cash register receipts, invoices, or contracts to inform your customers. You can also post signs at your place of business.

You also need to provide specific information to your customers who are GST/HST registrants claiming ITCs. For more information, see Records you need to support your claim.

Reporting the FNGST, filing your return and paying any amount due

Reporting the FNGST

Report the FNGST at the same time you file your GST/HST return. Combine both your FNGST and GST/HST amounts on your return.

Use one of these forms:

• Form GST34-2, Goods and Services Tax/Harmonized Sales Tax (GST/HST) Return for Registrants
• Form GST62, Goods and Services Tax/Harmonized Sales Tax (GST/HST) Return (non-personalized)

You have to file a GST/HST return for each reporting period, even if you have:

• no business transactions
• no net tax to remit

Calculating your net tax

For each reporting period:

• On line 105 (or line 103 if you file a paper return), combine the following amounts:
  • the FNGST on your taxable supplies made on land where the FNGST applies
  • the GST/HST on your taxable supplies made in the rest of Canada
  • On line 108 (or line 106 if you file a paper return), combine the following amounts:
    • the FNGST on your eligible expenses on land where the FNGST applies
    • the GST/HST on your eligible expenses in the rest of Canada

    The difference between the amounts on line 105 and line 108, including any adjustments, is called your net tax.

    Enter your net tax on line 109. If you file a paper return, enter your net tax on the return portion (Part 2) that you will send to the CRA. For more information on the net tax calculation, see Complete and file a return – Calculate the net tax.

    Filing your GST/HST return

    You can file your GST/HST return online.

    You can also file:

    • in person at most financial institutions
    • by sending your paper return (GST34-2 or GST62) to the address on the return

    Paying an amount due

    If your net tax (line 109 of your GST/HST return) for a reporting period is a positive amount, you have to make a payment. In most cases, your payment is due at the same time as your return. For more information, see Remit (pay) the tax you collected – When to remit (pay).

    If you have a GST/HST refund

    If your net tax (line 109 of your GST/HST return) for a reporting period is a negative amount, you can claim a refund.

    You can have your refund deposited directly into your bank account at a financial institution. To sign up for direct deposit, go to My Business Account or Represent a Client.

    Self-assessing the FNGST

    When you bring property or services onto land where the FNGST applies, you may have to self-assess that tax if you did not pay GST/HST on your original purchase of the property or services. For more information, see Information on the tax exemption under section 87 of the Indian Act.

    Non-registrants

    As an Indian or an Indian band that is not a GST/HST registrant, you may have to self-assess (report and pay) the FNGST in some of the following situations:

    You brought property from a place in Canada onto land where the FNGST applies.

    You did not pay the GST/HST.

    You have to report and pay the FNGST.

    Send the form and payment no later than one month after the month in which the property is brought onto land where the FNGST applies.

    You imported services or intangible personal property from outside Canada.

    You will consume, use, or supply the imported taxable supply on land where the FNGST applies.

    You have to report and pay the tax on imported services or intangible personal property.

    Send the form and payment no later than one month after the month in which the amount for the services or intangible personal property was paid or became payable.

    If you are not a GST/HST registrant and you imported property from outside Canada, you do not have to report and pay the FNGST because the GST/HST is collected at the border when the property is imported. This means that you do not have to self-assess the FNGST.

    GST/HST registrants

    As an Indian or an Indian band, you may have to self-assess (report and pay) FNGST in some of the following situations:

    You brought property from a place in Canada onto land where the FNGST applies.

    You will consume, use, or supply the property more than 50% in commercial activities.

    You did not pay the GST/HST.

    You have to report and pay the FNGST.

    R eport the tax in the reporting period when the property is brought onto land where the FNGST applies.

    Enter this amount on line 405 of your GST/HST return.

    You may be able to claim an ITC for the tax you self-assess on the property.

    You brought property from a place in Canada onto land where the FNGST applies.

    You will consume, use, or supply the property 50% or less in commercial activities.

    You did not pay the GST/HST.

    You have to report and pay the FNGST.

    Send the form and payment no later than one month after the month in which the property are brought onto land where the FNGST applies.

    You have to report and pay the FNGST.

    Report the tax in the reporting period in which the amount for the service or intangible personal property was paid or became payable.

    Enter this amount on line 405 of your GST/HST return.

    You may be able to claim an ITC for the tax you self-assess on the property.

    If you are a GST/HST registrant who brought property that you imported from outside Canada onto land where the FNGST applies or you bought intangible personal property or services to use 90% or more in your commercial activities onto land where the FNGST applies, you do not have to report and pay the FNGST since the GST/HST is collected at the border when the property is imported. This means that you do not have to self-assess the FNGST.