The Canada Revenue Agency defines the First Nations Tax (FNT), sometimes referred by some as a “community improvement fee”,  as a tax imposed on a specific selection of items  on various First Nations reserves.  This tax has not been enacted on all reserves and it only applies to listed alcohol, tobacco and fuel products that are set by each separate band council. The tax rate is 5% and the CRA is responsible for executing this tax for the First Nations

The First Nations band councils that have imposed the FNT are as follows:

• Westbank, British Columbia
• Tk’emlúps te Secwépemc (used to be known as Kamloops), British Columbia
• Sliammon, British Columbia
• Stz’uminus First Nation (used to be known as Chemainus), British Columbia
• Adams Lake, British Columbia
• Tzeachten, British Columbia
• Cowichan, British Columbia
• Little Shuswap Lake, British Columbia

It is important to note that although the Buffalo Point band council in Manitoba used to impose the First Nations Tax, they no longer apply it (as of October 3, 2011).

The above band councils impose the FNT on alcoholic beverages, fuel and tobacco products with the exception of Sliammon, which only taxes fuel and tobacco products and not alcohol.

The Canada Revenue Agency has published a guide to the First Nations Tax (FNT) which can be accessed HERE.

The FNT must be reported to the CRA along with the GST/HST.  So instead of just listing the GST/HST amount, you will need to add the FNT amount to the total.

The Canada Revenue Agency requires the form, GST499-1 First Nations Tax (FNT) Schedule,  to be filled out for every reporting period along with the GST/HST tax return, if the reserve where you sell the listed items imposes the First Nations Tax.

In some cases, members of the First Nations people are not obliged to pay the same amount of taxes as other Canadian taxpayers.  The major determining factor is whether or not earnings were made ON a First Nations reserve.

According to section 87 of the Indian Act and paragraph 81(1)(a) of the Income Tax Act, earnings made on a reserve do not need to be reported on your annual income tax return, in addition to products purchased on or delivered to a reserve.

It is important to note that some First Nations groups have a unique tax agreement with the government of Canada or have a self-governing agreement with the government of Canada whereby the information listed above may not apply to your particular circumstance. Contact your First Nations government in order to find out if this applies to you or call the Canada Revenue Agency at 1-800-959-8281.

In addition, personal property and income located on a reserve are also tax exempt according to section 87 of the Indian Act.

For more information about tax obligations by the First Nations people, the CRA has published a web page called, Information for Indians, which can be accessed HERE. Also, there is another web page on the Canada Revenue Agency website that may be helpful: Indian Act Exemption for Employment Income Guidelines