Tax & Trade Blog

The Ontario Ministry of Finance continues to turn the Ontario tobacco industry upside down – continuing to assess companies for failure to collect the Ontario Provincial Tobacco Tax (PTT) on sales of cigars and other non-cigarette tobacco (loose tobacco, pipe tobacco, chewing tobacco, snuff, etc.) to Status Indians on Federal Indian reserves.

The Canada Revenue Agency (CRA) has recently been assessing tobacco wholesalers that sell their cigarettes and other tobacco products to status Canadian Indians, on federal Indian reserves, for GST/HST that CRA says should have been collected because their purchasers were dealing with the tobacco on a commercial basis -- something that we would have thought was completely contrary to section 87 of the Indian Act, and the historic exemption from all taxation provided to Indians in respect of property situation on a reserve.

Indeed, one would have thought that the question as to whether tobacco sold and delivered on reserve to a status Indian was exempt of GST/HST was rhetorical (the answer being “yes” per the very clear wording of section 87 of the Indian Act, and over 20 years of CRA policy to the same effect), but it appears that the CRA is attempting to float a “commercial mainstream” argument in favour of its position.