As our members know, we have written many times about the rules governing sales to Status Indians and how, following the rules, the buyer/lessee in such cases may enjoy an exemption from all or part of the HST depending on delivery and other factors.

As we also know, folks are willing to go to great lengths to avoid as much as 13% on a vehicle purchase or lease. We have seen an increasing amount of Status Indian buyers coming to dealers to buy vehicles with spouses, family, boyfriends/girlfriends and even just friends hoping to take advantage of the same tax exemptions.

We asked CRA for an opinion about this as we are concerned that dealers might be audited over such sales in the future and asked to remit all or part of the HST that should have been collected and remitted.

What the CRA have said is interesting.

First, the relationship the Status Indian has with the other party doesn’t matter. It makes no difference if the other buyer/lessee is a spouse, family or friend.

Second, it may not be enough that both sign the purchase or lease.

Third, what does matter is that both are “jointly and severally liable to pay for property.”

It doesn’t matter whether the co-signer’s name is shown on the registration or not, but it’s not enough to simply include the Status Indian as a co-signer on a bill of sale or lease. There needs to be evidence that the Status Indian is jointly and severally liable for payment with the non-Status Indian buyer.

What does “jointly and severally” liable for payment mean? This might be easier to prove on a financed deal with co-signers (where both are responsible for the loan or lease) than it will be on a cash sale. CRA have not offered much guidance here, but it might help to show that both parties are actually paying for the vehicle in addition to both signing the contract.

For detailed rules please visit https://www.ucda.org/DealerInfo/StatusIndianFAQ.aspx or give our Legal Department a call anytime.