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The Used Car Dealers Association of Ontario

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Used Car Dealers Association of Ontario   

Remitting HST for “Off-Reserve” Sales to Status Indians

 

Vehicles sold to Status Indian purchasers who take delivery at the dealer’s premises (“Off-Reserve”) are exempt from the 8% provincial portion of the HST ... meaning the dealer should only collect and remit 5% tax on the sale.

However, dealers must report the full amount of HST that would normally be collected (13%) on Line 105 of their HST remittance form.  The 8% provincial portion of the HST that was not charged to the Status Indian should be shown on Line 111 (the Rebates line) and this amount should then be subtracted from the Net Tax on Line 109 to show the balance owing on Line 113.

Here’s a simplified example of how this would show on a remittance form.  For the purposes of this example, the sale of one vehicle for $10,000 is shown.  For simplicity, no Input Tax Credits (ITCs) are shown in the example. Normally, ITCs would be deducted on Line 106 to get the Net Tax on Line 109.

Total GST/HST (Line 105) $1,300 (13% of $10,000, though only 5% was actually collected)
Net Tax (Line 109) $1,300
Rebates (Line 111) $800 (the amount of HST the Status Indian did not pay)
Balance Owing (Line 113) $500 (amount remitted to CRA)

 

Dealers who do not file electronically using NETFILE, must also complete the appropriate sections of CRA Form 189 (Rebate Form) to show the amount of the rebate from Line 111 and send this form in with their remittance.

Form 189 can be found at http://www.cra-arc.gc.ca/E/pbg/gf/gst189/README.html. Dealers should check off the box for Code 23 in Part B of the Form and complete Parts A, C (Section II only) and E.

It is important to note that dealers will remit only the amount of HST collected (5% of the sale price). CRA will not actually issue a rebate.  However, CRA expects dealers to complete remittance forms this way. Failure to do so could lead to penalties being charged, to a maximum of 10% of the misreported amount.

This process does not apply to vehicles sold and delivered to a Status Indian on a Reserve.  No HST is charged and none is reported in that case.