Continued sales tax exemption for Ontario’s First Nations

When the new harmonized sales tax (HST) replaces the goods and services tax, and provincial retail sales tax (RST) on July 1, Ontario's First Nations will continue to be exempt from paying the provincial portion of the HST on eligible purchases off-reserve.

On June 17, 2010, the Ontario Ministry of Finance announced that Ontario will continue to provide a provincial exemption for First Nations under the new HST. The provincial sales tax exemption for First Nations has been available for 30 years under the RST system, but there was significant concern that this exemption would not continue under the HST. The exemption under the HST will be available effective September 1, 2010.

Under the HST, purchases by Status Indians are exempt when purchased on or delivered to a reserve by a vendor or its agent. Ontario’s treatment will extend this exemption to eligible goods and select services purchased off-reserve—the same system that exists right now under the RST.

As noted, the exemption will not come into place until September 1, 2010. In the interim, from July 1 to August 31, First Nations will have to submit receipts to the Ministry of Revenue to receive refunds.