Indian Status Tax Exemption: The First Comprehensive Guide for Tax Exempt Fuel and Tobacco

Person filing through Indian status tax exemption paperwork

First Nations individuals living on-reserve are entitled to receive tax exemptions on their fuel and tobacco purchases. This is protected under section 87 of the Indian Act. Please note that the term “Indian” is used throughout this guide because it has legal meaning under the Indian Act under which the Indian status tax exemption program is outlined. We realize that First Nation peoples may prefer to be referred to with different nomenclature. Each province in Canada has its own system even though this legislation is protected by the federal government. This means that no tax exemption system is exactly the same anywhere. As a result, retailers must either use manual paper claims mailed out to the government, or use an electronic Point of Sale system certified to work with their province’s tax authority requirements.

In this guide, we will go over all the information available regarding these exemptions and how each province deals with them. Please use the jumplinks below to view the information for your particular province. Certainly feel free to reach out to Wiz-Tec for more information on electronic systems.

Indian Status Tax Exemption Guide Banner

Download the full PDF guide here!

Applying for a federal Certificate of Indian Status (status card) for tax exemptions

Many provinces use the federal status card as a means to verify an individual’s eligibility for tax exemptions. Therefore, it is important that First Nations have their status card readily available when purchasing fuel or tobacco on-reserve. Applying for a status card is a fairly straightforward process. Eligible individuals must fill out the Secure Certificate of Indian Status (SCIS): Application for already registered persons form. After that, they must submit it to their respective Indigenous Services Canada (ISC) or Crown-Indigenous Relations and Northern Affairs Canada (CIRNAC) regional office. Individuals can mail in (a guarantor is required) or submit forms in person.

It’s important to note that in order to receive a Secure Certificate of Indian Status, individuals must be registered under the Indian Act. You can find more information about how you can apply for a status card as well as the necessary documentation to submit on the official site for the Government of Canada. These cards must be presented to the retailer providing the exemption at the time of purchase for confirmation of eligibility.

Alberta Indian Tax Exemption (AITE) Program

On-reserve First Nation retailers providing fuel, tobacco, and accommodation are entitled to receive a refund of the appropriate taxes and levies on these products and services. However, this is only applicable when an eligible individual purchases these from them. Authorized retailers must purchase fuel and tobacco from bulk suppliers with taxes included. However, they will receive a refund for these taxes through the AITE program. These refunds include the Alberta fuel tax, carbon tax, tobacco tax, and the tourism levy. Until October 4, 2021, First Nation retailers may validate eligibility through the AITE card. This will be discontinued in favour of the federal Certificate of Indian Status card for tax exemption validation. Retailers have a choice between manual paper claims or an electronic system integrated into their Point of Sale system to submit claims for refunds automatically.

Registering as an AITE Retailer

In order for a First Nation retailer to receive the appropriate refunds for their tobacco and fuel product sales, they must be registered with the Alberta Tax & Revenue Administration as an AITE retailer. To register as an AITE retailer, owners must:

  1. Fill the AITE Retailer Registration form, the application for direct deposit, and contact a certified POS vendor such as Wiz-Tec
  2. Be authorized by and make a copy of the Band Council Resolution for the store’s operation
  3. Submit the above documents along with a void cheque to the TRA
  4. Complete and submit the Exempt Sale Retailer Agreement sent to them by the TRA
  5. Receive approval and contact the chosen POS vendor to confirm installation

For more detailed information and to access all the necessary forms, visit the TRA website on the AITE program.

Manual Claims

Retailers that use manual claims for their tax exemptions must fill out a AITE Retailer Refund Application form once a week. They must then submit the form to the Alberta Treasury Board and Finance, Tax and Revenue Administration. Detailed records of each transaction and voucher for tax exempt sales must be maintained as the TRA may request vouchers to process claims. Records must include the customer’s status registration information, the transaction details, and signatures. These records must be kept secure and for up to four years for auditing purposes. Once claims are assessed by the TRA, they will issue the appropriate refund via direct deposit.

Electronic Claims through AITE Direct

Point of Sale systems such as iPOS with AITE Direct integration offer the advantage of automatically recording each sale and tax exemption during the transaction and checkout process. Since the POS system is directly connected with the AITE card database, which is updated daily by the TRA, retailers are able to confidently process transactions as they have less risk of providing tax exemptions to ineligible cardholders. Every Sunday, the TRA automatically creates a refund claim with the information received from the Point of Sale system. After that, the TRA begins processing the return. Once approved, the refund is sent to the retailer via direct deposit. As with paper claims, copies of transaction information and tax exemption details must be kept for up to 4 years. POS systems do this electronically and maintain backups of this information for the retailer’s convenience.

For more information on submitting refund claims to the TRA, please see the AITE website.

Eliminating the AITE Card (June 21, 2021 now October 4, 2021)

On April 15, 2021, the Government of Alberta’s Tax & Revenue Administration announced their plan to phase the province out of using the Alberta Indian Tax Exemption (AITE) Card. Since many other provinces use the federal status card instead of a dedicated provincial card, this would eliminate unnecessary processes for Albertan First Nations. This change means that First Nation fuel and tobacco retailers must only accept status cards as evidence for tax exemptions as of October 4, 2021. Retailers with Point of Sale (POS) systems for electronic exemptions must ensure that their provider upgrades or updates their system to be compatible with the registration number on status cards. If this update is not made, the retailer must use the manual method of submitting claims until their electronic system is updated to be compatible with status cards as claims done with an AITE Card will not be accepted.

British Columbia Exempt Sale Retail Dealer (ESRD) and/or Exempt Fuel Retailer (EFR) Program

The Government of British Columbia currently uses a paper-based tax exemption system for their First Nation retailers on-reserve. The province confirms customer eligibility for tax exemptions on fuel and tobacco through the federal Certificate of Indian Status (status card). Though most First Nations use this system, Treaty First Nations such as the Tsawwassen First Nation, Maa-nulth First Nations, or Nisiga’a First Nations are not eligible for these exemptions after the date assigned in their respective treaties.

To receive tax refunds, First Nation fuel and tobacco retailers must record of every tax exempt transaction on a Schedule of Sales of Tax-Exempt Fuels to First Nations form. This form must be submitted to the provincial tax agency on a monthly basis. Additionally, retailers must submit the Tax Return – Exempt Fuel Retailer form to receive the rebate for the taxes they pre-paid to their bulk suppliers on product sold to tax exempt individuals. For more information on how to submit tax exemption refund claims, please look at the bulletin on the Fuel Tax Exemption Program. To be able to sell tax-exempt fuel, First Nation retailers must register in the Exempt Fuel Retailer program.

Registering as a Exempt Fuel Retailer (EFR)

In order for a First Nation retailer to receive the appropriate refunds for their tobacco and fuel product sales, they must be registered with the BC Ministry of Finance as an EFR or ESRD retailer. To register owners must:

  1. Complete the Application for Registration as an Exempt Sale Retail Dealer (ESRD) and/or Exempt Fuel Retailer (EFR).
  2. Submit the application to the appropriate government entity
  3. The BC Ministry of Finance will contact you and go over the details regarding your application and eligibility
  4. If you are applying for the Fuel Retailer permit, you will be asked to sign and return an agreement regarding your duties and the conditions of your EFR permit.
  5. Once approved, the Ministry will send you the permit required for you to begin taking tax exempt sales. This permit must be displayed in your store.

Note that eligibility for the EFR or ESRD programs varies and is dependent on many factors. For more detailed information on applying to be an EFR or ESRD retailer, please review the Government of British Columbia’s website.

Manual Claims

Since this provincial system is based on paper exemptions, retailers must record every tax exempt transaction they process. Tax exempt sales must be recorded in the Schedule of Sales of Tax-Exempt Fuels to First Nations during the transaction. The attendant must check that the status card’s photo matches the individual purchasing the goods, they must then record the customer’s status card number along with the volume and type of fuel they purchased on the form above, then finally capture the customer’s signature on the form and confirm that the signature matches the one on the status card presented. This form must then be submitted by mail each month. Additionally, retailer must submit the tax return for the business to receive any refunds available.

Electronic Systems

Point of Sale providers in BC may be able to simplify the transaction recording process for First Nation retailers. This is done by automatically and electronically recording the information necessary to fill in the forms to be submitted monthly. Electronic POS systems record the status holder’s data directly in the POS system. The system records it in an electronic document for printing by the retailer. This document would then be mailed out to the Ministry of Finance for review each month. This removes the need to manually collect the customer’s data and risk having the paper form being lost or written illegibly. Electronic alternatives also store these records securely and regularly back up the information in case an audit is necessary.

Tobacco and Fuel Tax Exemption Simplification Project

The Ministry of Finance started a simplification project for the tax exempt transaction recording process. They announced they will begin to develop a new system for retailers without an electronic alternative. The Tobacco and Fuel Tax Exemption Simplification Project is meant to replace the current paper claims. As a result, the province hopes to modernize by allowing retailers to check the eligibility of their customers in real-time through their POS system. Retailers with an electronic system already should expect to be able to do the same with their existing set up. Those without a system may receive a tablet for the sole purpose of recording these sales to submit to the Ministry. This project is currently in development.

Saskatchewan Fuel and Tobacco Tax Refund Program

The province of Saskatchewan uses an electronic system for tax exempt transactions of on-reserve retailers. First Nation retailers must sign up to be part of the First Nations Fuel and Tobacco Tax Refund Real Time Validation System (RTVS). After this, they receive a point of sale system capable of processing these transactions. Currently, the province of Saskatchewan only accepts transactions with tax exemptions through the electronic system. This is so that the Certificate of Indian Status may be validated in real-time. Retailers must pre-pay the taxes on the bulk fuel and tobacco then submit a claim to receive the refund.

Registering as an RTVS Retailer

In order for a First Nation retailer to receive the appropriate refunds for their tobacco and fuel product sales, they must be registered with the SK Ministry of Finance as a RTVS retailer. To register as an RVTS retailer, owners must:

  1. Complete the Application for Fuel and Tobacco Tax Refund Program For On-Reserve Sales to Status Indians
  2. Complete the Fuel Tax Agreement
  3. Get a Band Council Resolution for proof of authorization by the band to sell fuel and tobacco on-reserve
  4. Complete a Direct Deposit Form
  5. Complete the Business Consent Form
  6. Choose a Point of Sale (POS) provider such as Wiz-Tec from the list of certified vendors
  7. Submit all necessary documentation to the Ministry of Finance

For more detailed information on applying to be an RTVS retailer and all the necessary forms for application, please review the Government of Saskatchewan’s website.

Manual Claims

Paper and manual claims are not available in Saskatchewan. The Ministry requires on-reserve retailers to have an electronic point of sale system to submit claims for tax exemptions. All retailers are required to submit sales electronically through certified point of sale providers. This is so they may verify that the customer purchasing the products are eligible in real-time.

Electronic Claims

The Ministry implemented a Real Time Validation System (RTVS) for all tax exempt transactions to eligible individuals on-reserve. Retailers in this program must have a point of sale system that is certified to work in the province. The RTVS works within the certified point of sale system by capturing the necessary information about the eligible individual and verifying that individual’s eligibility at the time of purchase. Saskatchewan uses the Certificate of Indian Status, or status card, as the identifying document so the point of sale system will record the customer’s status card information at the time of transaction and transmit the information to the Ministry of Finance electronically in real time to reduce paperwork for both the retailer and the Ministry. Retailers can expect to receive their refund payments every second week. Transactions received by Tuesday are to be included in the bi-weekly refund.

Manitoba

Manitoba uses a paper-based tax exemption system similar to the one currently used in BC. Retailers providing tax exemptions must validate the eligibility of their customer by checking the federal Certificate of Indian Status (status card) at the time of purchase. First Nation retailers in the province are eligible to receive tax refunds on the taxes paid on fuel and tobacco purchased to be resold to eligible tax exempt customers.

Registering to be a Tax Exempt Retailer

First Nation retailers looking to be part of the tax exemption program must contact the Manitoba Ministry of Finance to apply for registration. They must also contact their band office for more information on approval for tax exemption for their business.

Manual Claims

The tax exemption system in Manitoba is paper-based. Tax exempt transactions to eligible individuals must be recorded for submission to the appropriate tax authority. Manitoba uses the federal status card so the information recorded and verified should match that of the status card. Best practices dictate that the retailer record the customer’s name, status card number, transaction number, date of purchase, litres of fuel and units of tobacco purchased, and the dollar amount of exemption granted. These records must be submitted to the tax authority for approval and refund via mail or email every week.

Electronic Claims

Since the province is paper-based, electronic POS systems simply make transaction information recording a much simpler and faster process. Point of Sale integration means the system automatically records the transaction number, date, and quantity of fuel or tobacco. As a result, the retailer must simply input the status card holder’s name and status number into the system. This information will be compiled into a report which the retailer may use to email or mail to the tax authority for their refund every week.

Ontario First Nations Gas Tax Rebate Program

Ontario uses one of the more advanced tax exemption systems in Canada. They use real-time validation of the Certificate of Indian Status card and automatic voucher submission through a certified POS system. Wiz-Tec is the dedicated provider of this service for the Ontario Ministry of Finance. Ontario previously used the Ontario Gas Card as the verification of eligibility for fuel tax exemptions. This was replaced by the federal Certificate of Indian Status on January 1, 2020.

The transition to this card on the electronic systems in the province was handled by Wiz-Tec overnight to prevent and mitigate any disruptions to First Nations retailer operations. Since then the province has been using status card numbers to verify purchases by tax exempt customers. This has reduced the amount of paperwork sites in Ontario are required to do as the vouchers are automatically submitted to the Ministry for approval. Retailers in Ontario are still able to use paper-based vouchers for their tax exemption claims.

Registering to be an Authorized On-Reserve Retailer

First Nation retailers must contact the Ontario Ministry of Finance to apply for registration onto the program. They must also contact their band office for more information on approval for tax exemption for their business.

Manual Claims

Retailers that choose to use the paper-based system will need to fill out a paper voucher. It must include the following information; the dealer’s name and authorization number; date of sale; total cost (including tax); vehicle license number; total litres purchased; tax per litre; tax included in the total cost (to be deducted) and the net cost to the First Nations individual purchaser; the information embossed on the Certificate of Exemption (reproduced by means of an imprinter on the vouchers); and the signature of the eligible First Nations purchaser. Vouchers may only be recorded for one sale at a time. They must be sent to the Ministry of Finance in packages of less than 200. A note of the total number of litres sold and the taxes must be attached for each bundle.

To order a supply of paper vouchers, retailers must contact the Ministry of Finance at 1-866-ONTTAXS (6688297) or commodity.tax@ontario.ca.

To apply for a refund, First Nation retailers must then fill out a Application for Refund Tax Exempt Sales (TES). These items, along with purchase invoices for the bulk gasoline must be included in the package sent to the Ministry. For more information on how to process paper vouchers, please visit the Ministry’s guide.

Electronic Claims

To process tax exempt transactions, retailers simply enter the customer’s status number into their point of sale system. This will automatically create an electronic voucher. The POS system validates the eligibility of the customer and lets the retailer know if they can give the exemption. Retailers process the transaction normally and the POS system would automatically take off the appropriate taxes from the total. The point of sale system then finalizes the transaction, sends the voucher electronically to the Ministry for approval, and prints a duplicate copy for the retailer to sign. The customer is not required to sign this duplicate voucher. However, the retailer is required to give them a copy of the slip to show that the tax exemption was processed.

Retailers have the choice of acting as their own service provider or choosing another provider to process their electronic vouchers. They must procure a service provider at their own expense, and ensure they are authorized to submit claims for them. This can be done by completing and submitting the Authorizing or Cancelling a Representative form.

Quebec – Program for Administering the Fuel Tax Exemption for Indians

Quebec’s Indian status tax exemption process is the most technologically advanced and accessible in Canada. Like other provinces, on-reserve First Nations retailers in Quebec are entitled to receive refunds for the taxes they prepay. Wiz-Tec Computing Technologies is the dedicated provider of the province’s electronic tax exemption software and hardware. Revenue Quebec distributes the point of sale systems necessary to the First Nation retailers in the program. First Nations that want exemptions on their fuel purchases must submit a Registration Application for Indians form. This is so they may receive the Attestation d’inscription necessary to receive the exemption upon purchase.

The automated system for tax exemptions has been in place since 2013. Revenue Quebec covers the costs of installation and maintenance of these systems. Retailers are obligated to collect all the necessary information from tax exempt customers. Additionally, they are required to clearly display the sale price of fuel with and without taxes for customers to view. This is so customers may be assured the tax exemption was granted. More information can be found on the Obligations of a Retail Dealer Situated on a Reserve webpage.

Registering for the Automated Tax Exemption

A retailer eligible to give tax exemptions on reserve must contact Revenue Quebec to set up their automated system. Retailers can choose to not use the automated system. However, they are to fill out paper forms instead to submit to Revenue Quebec for approval on tax exempt sales.

Manual Claims

Retailers who choose to not participate in the automated solution program must file their claims through paper forms. When an eligible individual purchases tax exempt fuel, the retailer must fill out the information requested on form AZ-1020 .A,Registre des ventes au détail effectuées aux Indiens for each sale they make. Only the French version of this form can be submitted for approval. Additionally, the retailer must follow the guidelines set out in the Guide for Retail Dealers Using Paper Forms. This can be found under: Completing the Registre des ventes au détail effectuées aux Indiens, Collection and Refunds, and Reporting and Forms to File. As per Revenue Quebec’s guidelines, the required forms must be submitted by the 15th of the month following the period covered by the return.

Electronic Claims

The province of Quebec provides authorized tax exempt retailers with an electronic point of sale system at no charge. The automated solution for tax exemptions allows retailers to provide exemptions in real-time to eligible consumers. This is done by scanning the barcode on the individual’s Attestation d’inscription. Additionally, they must enter the number on the individual’s federal status card. This information will confirm or deny the customer’s eligibility for a tax exemption. As a result, if the sale is tax exempt, the point of sale system automatically removes the necessary taxes from the sale and sends the transaction information to Revenue Quebec for approval of the refund to the retailer once the payment is processed.

Revenue Quebec sends on-reserve retailers the refunds on tax exempt sales every week. For more information on the automated solution, visit the Guide For Retail Dealers Using the Automated Solution.

Nova Scotia Indian Fuel Tax Exemption Program (NSIFTE)

Nova Scotia’s Ministry of Finance runs their Indian status tax exemption program with verification through a status member’s driver’s license. The province uses driver’s licenses instead of their status card or dedicated provincial card like other provinces. First Nations individuals must register themselves in the NSIFTE Program before they are eligible to purchase tax exempt fuel or tobacco. Since the system relies on verification of registration through the retailer’s point of sale, paper based exemptions are not possible. The retailers participating in the program use electronic means for claim submissions. Instead, submitting paper claims is the responsibility of the customer. Customers fill a refund form for fuel taxes over $100 if not granted at the time of purchase. For a First Nation individual to be able to purchase tax exempt fuel and tobacco they must:

  1. Fill the Nova Scotia Indian Fuel Tax Exemption Program Program Application
  2. Present the filled out registration form, driver’s licence, and federal Certificate of Indian Status to their respective Band Office
  3. The Band membership clerk would then review and certify the application and send it to the Department of Service Nova Scotia and Internal Services
  4. If approved by the Department, the eligible individual would now be able to swipe, scan, or key in their license number when making a tax exempt purchase at a registered on-reserve retailer

According to the Government of Nova Scotia’s website, this process should take approximately 1 to 2 weeks.

Registering to be an Authorized On-Reserve Retailer

Eligible retailers must contact the Nova Scotia Ministry of Finance to register for the NSIFTE program. The retailer would then receive the necessary information to set up their automated point of sale system.

Manual Claims

The authorized retailer’s POS system does the tax exemption verification process in Nova Scotia. Customers are responsible for filing manual claims for tax exemptions if they do not receive them. To receive a refund for taxes (in excess of $100), the customer must submit a Nova Scotia Receipt Based Claim for Person/Individual who has status under the Indian Act Refund Application. The government will process and approve claims in 3 to 6 weeks. For more information, visit the Nova Scotia website. Only an authorized retailer can issue purchase receipts for refunds. This means a retailer with an approved electronic point of sale system.

Electronic Claims

Tax exempt purchases at authorized retailers must be verified through the retailer’s point of sale system. The system validates customers through swiping, scanning, or keying in the individual’s driver’s license. Individuals with an unregistered license cannot receive an exemption at the time of sale. The electronic process verifies the identity and eligibility of a status holder in real time. After identity is verified, the system takes the appropriate taxes off the fuel or tobacco purchase. The POS then submits a claim for a refund on the taxes paid by the retailer to the Government of Nova Scotia for approval.

Prince Edward Island

There are only four First Nation reserves on Prince Edward Island. As a result, the province does not allow exemptions for First Nations individuals from other provinces. This mean that manual claims limit the tax exemption system. First Nations individuals in this province are exempt from the provincial Retail Sales Tax and Harmonized Sales Tax as well as the Carbon Levy on fuel products purchased on reserve. The retailer providing the tax exemption to an eligible individual must record the details on that individual’s status card. These details include: the name, band number, and PEI reserve address of the customer when issuing tax exemptions on sales. Retailers send these to the appropriate tax authority for approval of the refund.

New Brunswick

The Government of New Brunswick does not have an Indian status tax exemption system in place like other provinces. Instead, it is the only province with tax agreements with First Nations communities. According the provincial government, these agreements outlined that First Nations communities would receive refunds of 95% for the first $8 million collected in provincial sales tax and 70 per cent on amounts thereafter. On April 2021, the premier of the province announced that the province would end these tax-sharing agreements. However, First Nations communities won a ruling against the province which granted them the right to share taxes collected from the Carbon Levy. The province proposes collaboration with First Nations to implement a different taxation system.

Newfoundland & Labrador

There is no formal system for Indian status tax exemptions on fuel or tobacco in Newfoundland and Labrador.

The Territories (Northwest Territories, Nunavut, Yukon)

There is no formal system for Indian status tax exemptions on fuel or tobacco for in the Territories. Wiz-Tec provides a dedicated solution to some retailers in the Northwest Territories. This system is similar to the one provided to retailers in British Columbia. Nunavut and the Yukon do not have a designated system to exempt taxes from purchases by First Nations.

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